For Private Circulation Only

Technical and Derivatives Review

| October 17, 2020

11600 becomes a key support

Sensex (39983) / Nifty (11762)

Source: Trading View

Future outlook

This week’s price action can be divided into two parts where the first half was more of a consolidation with no major movement and

the latter one brought some volatility in the market. We managed to clock the psychological mark of 12000 but failed to sustain

there. In fact, due to sudden sell off in global markets on Thursday on the fears of a second wave of coronavirus hitting the major

European countries, we witnessed a sharp decline in our markets. Fortunately, there was no follow through to this as we saw

modest recovery to end the week well above 11700.

In the last couple of weeks, we have seen a remarkable recovery in our market after testing the 200-SMA level of 10800. Since the

move was extremely swift and markets had a winning streak of 10 straight sessions before Thursday, any uncertainty was likely to

trigger profit booking and this is exactly what we have seen. Now, purely looking at charts, this down move should only be

interpreted as a pull back towards the recent trend line breakout points. This coincides with the 20-day EMA level of 11600. Hence,

all eyes would be on this level in the forthcoming week. However, since the fall has to do with the global uncertainty, it would be

important to see how things pan out there and if things worsen, we may see the market correcting further. A close below 11600

would apply brakes on the recent optimism and we may then see some extended correction in the market. Till then there is no

reason to worry as we may see markets resuming the strength beyond 11850-11900 to surpass the 12000 mark convincingly.

In the week gone by, we witnessed some sectoral shift in the market in the second half. The recent outperforming IT space had seen

some decent profit booking along with Reliance; whereas on the other side, the banking which was considered to be a laggard has

shown some serious strength to support the market. Hence going ahead, if Nifty has to resume the uptrend, the banking clearly

plays a vital role in this. Apart from this, Midcaps are yet to perform and hence, the breakout in this index should bring back some

excitement in the traders’ fraternity.

For Private Circulation Only

Technical and Derivatives Review

| October 17, 2020

Market declines merely on profit booking

Nifty spot closed at 11762.45 this week, against a close of 11914.20 last week. The Put-Call Ratio has decreased from 1.60 to 1.31.

The annualized Cost of Carry is positive at 0.64%. The Open Interest of Nifty Futures has decreased by 5.60%.

Derivatives View

Nifty current month future closed with a premium of 2.70 points against a premium of 15.60 points to its spot. Next month future is

trading at a premium of 27.20 points.

As far as Nifty options activities are concerned, 11700-12200 call options added open interest whereas 11700-11600 put options too

witnessed addition of positions. Maximum open interest for the weekly series is at 12000 call and 11000 put options.

We started the week around the 12000 mark and the index then consolidated within a range of 200 points for initial three trading

sessions. However, on the weekly expiry session, the global markets were trading with deep cuts and thus, traders preferred to book

profits on the long positions. Our markets too corrected sharply and ended the weekly expiry below 11700 mark. On Friday, Nifty

recovered marginally but still, it ended the below 11800. The indices corrected mainly due to profit booking as the open interest in

both Nifty and Bank Nifty declined by over 5 percent. FII’s too unwound some of their longs in the index futures segment and their

‘Long Short Ratio’ now stands at 66 percent. For the coming week, the data indicates a probable trading range of 11700-12000 for

Nifty and a breakout beyond this range could then lead to some directional move. Till the index consolidates within this range,

traders are advised to look for stock specific trading opportunities and take aggressive trade only on a breakout from the range.

Weekly change in OI

Short Formation

Scrip

Futures

Chg (%)

Price

Chg(%)

UPL 13509600 38.06 468.60 (6.20)

GODREJCP

5773000

19.52

679.15

(6.06)

VEDL

80668200

12.38

95.25

(21.64)

BANKBARODA

50462800

11.79

40.50

(8.99)

ZEEL

35559000

9.63

176.35

(12.13)

Long Formation

Scrip

Futures

Chg (%)

Price

Chg(%)

ACC 2334000 25.35 1566.00 3.76

AMBUJACEM

18123000

15.18

248.65

3.60

MUTHOOTFIN

3799500

11.93

1185.60

3.27

DLF

31270800

6.54

163.3

3.58

NAUKRI

665250

5.68

3607.30

3.96

For Private Circulation Only

Technical and Derivatives Review

| October 17, 2020

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Technical and Derivatives Team:

Sameet Chavan Chief Analyst – Technical & Derivatives sameet.chavan@angelbroking.com

Ruchit Jain Senior Analyst - Technical & Derivatives ruchit.jain@angelbroking.com

Rajesh Bhosale Technical Analyst rajesh.bhosle@angelbroking.com

Sneha Seth Derivatives Analyst sneha.seth@angelbroking.com