For Private Circulation Only
Technical and Derivatives Review
| January 16, 2021
Market cools off a bit, 14650 becomes immediate hurdle
Sensex (49035) / Nifty (14434)
Source: Trading View
Future outlook
Second week of the new calendar year started with a good bump up at fresh record high tad below the 14500 mark on Monday. In
the initial hour, we witnessed a small bout of correction; but similar to recent trend, the intraday decline was bought into and the
index thereafter once again resumed its upward trajectory. The similar price movement was continued for following three sessions.
However, on Friday, there was some sustained profit booking seen to conclude the week tad below the Monday’s opening point.
The bulls are continuing with their strong hold on the market and barring single day of sharp correction last month, the relentless
rally resumed to clock fresh record highs day by day. In our intra-week commentary, we had mentioned how 2.30 factor played out
well since last few days. There was a typical pattern when we see some price decline in the first half and buying emerges in the latter
half to hit new record highs. But this winning streak finally got snapped on Friday when market corrected further after 2-2.30.
Although it’s just a one day activity and still no major damage done, we expect 14650 to act as an immediate resistance now. On the
daily chart, Nifty closed below 5-day EMA for the first time in the recent past, which is a first sign of weakness. Hence, in the
forthcoming coming week, the extension of profit booking cannot be ruled out. The moment we see Nifty sliding below 14380, we
expect the Nifty to slide towards 14250-14100 levels.
In fact, stock specific the fatigue was seen in so many counters from Wednesday itself. The major banking index is at its previous
record highs and the Nifty Midcap 50 index, which is at crucial Fibonacci ratios, may provide this much awaited corrective move. Let
see how things pan out in the early part of the coming week. Since the overall trend has been strongly bullish, even if the correction
comes, one needs to go one at a time rather than projecting bigger downside targets. Traders are advised to stay light and avoid
aggressive leveraged positions.
For Private Circulation Only
Technical and Derivatives Review
| January 16, 2021
The fear index surged 16% last week, stay cautious
Nifty spot closed at 14433.70 this week, against a close of 14347.25 last week. The Put-Call Ratio has decreased from 1.71 to 1.19.
The annualized Cost of Carry is positive at 4.82%. The Open Interest of Nifty Futures has decreased by 1.56%.
Derivatives View
Nifty current month future closed with a premium of 24.80 points against a premium of 23.65 points to its spot. Next month future
is trading at a premium of 59.60 points.
Must say, market remained volatile last week and hence we saw mixed activity in terms of open interest in index futures segment.
The PCR-OI surged to 1.80 on Tuesday, which clearly suggested market was overbought. From the next trading sessions, strong
writing was observed in 14600-14700 call options. On Friday, we also saw good amount of writing in 14500 strikes. In case of puts,
hardly any meaningful build-up was seen during the week. Highest open interest concentration for the coming weekly series has
shifted lower to 14600 call and 14000 put options. The Volatility index surged more than 16% last week, which is certainly not good
for Bull’s. Considering the overall development seen in F&O space, we expect some follow-up selling in the coming week as well.
Hence, traders are advised lightening up their longs and prefer buying slightly OTM puts in case of any pullback around 14500-
Weekly change in OI
Short Format
Chg (%)
SAIL 179322000 90.82 70.50 (8.26)
RBLBANK 25522900 39.21 252.60 (4.43)
DIVISLAB 3204200 29.54 3661.70 (5.26)
APOLLOTYRE 13175000 24.76 184.25 (4.68)
VOLTAS 2263000 24.07 891.65 (1.26)
Long Formation
Chg (%)
MRF 62000 28.50 87823.70 8.70
PNB 183264000 21.98 36.10 1.40
IDEA 1041250000 20.88 13.75 16.03
HINDPETRO 29427300 19.57 229.60 1.73
L&TFH 33465600 19.11 103.55 1.52
For Private Circulation Only
Technical and Derivatives Review
| January 16, 2021
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]g.com
Ruchit Jain Senior Analyst - Technical & Derivatives ruchit.jai[email protected].com
Rajesh Bhosale Technical Analyst rajesh.bhosl[email protected]ng.com
Sneha Seth Derivatives Analyst [email protected]gelbroking.com