Technical and Derivatives Review | February 16, 2018
Further pain left, close eye on 10398
Sensex (34011 ) / Nifty (10452)
Source: Trading View
Future outlook
In last couple of weeks, the dependence on US markets increased substantially at least for the opening proceedings. On all four
occasions during the truncated week gone by, our markets opened higher but mostly the picture changed as we approached the
closing point. The intraday volatility seems to have increased and this is what we call it as ‘Choppiness’. At the end, the market did
not go anywhere as we saw few false breakouts from intraday range on either side.
Having said that, the Friday’s session clearly had one-way traffic as we saw index kept on descending throughout the session to
conclude at its lowest point of the week. Now, due to last week’s consolidation, we can see a defined range of 10650 - 10398 for
the index going forward. On daily chart, we can see a formation of ‘Inverted Pennant’ in the making. A slide below 10398 would
confirm the pattern and in this scenario, we can expect retesting of 10200 - 10033 levels in days to come. On the flipside, a move
beyond higher end (10650) would provide some relief rally; but it certainly does not change the ‘Sell on Rise’ strategy in the near
term as we are yet to see a complete impact of the ‘Bearish Engulfing’ pattern formed during the antepenultimate week.
Traders are continuously advised to remain light and should ideally avoid any kind of bottom fishing in the near term. In between we
are likely to see some bounce backs; but this time, a possibility of these rallies getting sold into is quite high. Considering the
distortion of weekly and probably the monthly chart as well, we consider this as a corrective phase of the entire rally seen from
December 2016 lows. Hence, it is fair to accept that we may not be able to see new highs at least for next few months. In a broader
sense, such pauses are essential in order to keep the multi-year Bull Run intact which will provide better buying opportunities for
investors standing by on sidelines for a long time.
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Technical and Derivatives Review | February 16, 2018
10600 to be seen as immediate wall
Nifty spot closed at 10452.30 this week, against a close of 10454.95 last week. The Put-Call Ratio has decreased marginally from 1.09
to 1.07 and the annualized Cost of Carry is positive at 0.61%. The Open Interest of Nifty Futures increased by 5%.
Derivatives View
Nifty current month future closed with a premium of 1.05 points against a premium of 14.75 points to its spot. Next month future is
trading with a premium of 31.05 points.
As far as Nifty options activity is concerned, we saw fresh open interest addition in 10500-10600 call options; whereas, in puts, some
OI build-up was seen in 10500 strike followed by unwinding in 10000 strike. At present, maximum open interest in call option stood
at 10600 strike, whereas in put option it is placed at 10500 strike.
In the week gone by, Nifty index traded in a narrow range and ended the week on a flat note. However, OI in Nifty increased by 5%
during the week. While mixed activity was seen by FII’s in the index futures segment and at the same time, they have bought some
index call options in this week. However, their short positions created during the series are still intact as their ‘Long-Short Ratio’ is
still at 46%. In Nifty options front, good amount of OI build was seen in 10500-10600 call options, indicating 10600 to act as an
immediate wall as we head to the expiry week. The index has been witnessing selling pressure from mentioned resistance and since
some unwinding was also seen in put options towards the fag end of the week, we may see more downside in the expiry week.
Long Formation
Short Formation
Chg (%)
Chg (%)
Chg (%)
Chg (%
Weekly change in OI
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Technical and Derivatives Review | February 16, 2018
Technical and Derivatives Team:
Sameet Chavan
Chief Analyst - Technical & Derivatives
[email protected]
Ruchit Jain
Technical Analyst
[email protected]
Rajesh Bhosale
Technical Analyst
[email protected]
Sneha Seth
Derivatives Analyst
[email protected]
Research Team Tel: 022 - 39357600
For Technical Queries
E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
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