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Technical and Derivatives Review
| June 18, 2021
Nifty ends its weekly winning streak but holds key supports
Sensex (52344) / Nifty (15683)
Source: Trading View
Future outlook
Monday’s session started on a flat note; however, before anyone could realize Nifty was down by nearly 200 points within the first
half an hour to test the 15600 mark. This was followed by a bounce back and then consolidation for the major part of the first half.
During the second half, bulls again picked up some momentum to erase all the morning losses and ended marginally in the green tad
above 15800. On the following day, Nifty reached yet another milestone of 15900; but thereafter, some sort of tentativeness was
visible in the banking space as well as the broader market. The real impact of this was witnessed on Friday as we saw Nifty tumbling
more than 300 points in a matter of 2 hours. The action was not done yet as we saw almost a v-shaped recovery in the remaining
part of the session to conclude with negligible loss. On a weekly basis, Nifty shed more than seven tenths of percent.
It was clearly an action packed week for markets and despite we defending key levels, the Nifty ended its recent winning streak on a
weekly basis. Now the kind of price action we experienced on Friday, it’s like ‘Half glass full or half empty’. As an optimist, the key
indices have managed to hold crucial levels but from a pessimist’s perspective, we are struggling at higher levels and importantly,
the outperforming MIDCAP index has started to display some signs of exhaustion. In our previous weekly commentary, we had
mentioned how the NIFTY MIDCAP 50 has reached a cluster of various Fibonacci ratios and this week’s correction has clearly
validated our assumption. We are now stepping into a monthly expiry week and looking at overall positioning of our market, we
expect the volatility to increase a bit. If we take a glance at the weekly chart of Nifty, we can see two back to back small body
candles and this week’s formation resembles a ‘Hanging Man’ pattern. Such pattern requires confirmation in the form of breaking
it’s low. Hence, it would be interesting to see how things pan out in the first half of the forthcoming week. As far as levels are
concerned, 15820 15880 to be seen as immediate resistances; whereas on the lower side, 15550 15450 15400 are to be seen
as support levels. We advise traders to lighten up positions at higher levels and it’s better to go one step at a time for a time being.
This week Sectorally we saw lot of churning where defensive spaces like FMCG and IT showed some strength. Amongst the losers,
Metals had a terrible week as we saw more than 6% cut in the index. Despite some recovery, the banking index ended the week with
nearly one and half percent loss. On expected lines, the NIFTY MIDCAP 50 index saw a meaningful correction over 3% this week.
For Private Circulati
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Technical and Derivatives Review
| June 18, 2021
Profit booking drags Nifty off the highs ahead of expiry week
Nifty spot closed at 15683.35 this week, against a close of 15799.35 last week. The Put-Call Ratio has decreased from 1.35 to 1.18.
The annualized Cost of Carry is positive at 5.18%. The Open Interest of Nifty Futures decreased by 17.45%.
Derivatives View
Nifty current month future closed with a premium of 44.15 points against a premium of 17.95 points to its spot. Next month future
is trading at a premium of 96.65 points.
In options segment, 15700-16000 call options witnessed decent addition of open interest while some addition was seen 15600-
15400 puts too. Maximum build-up in the monthly series is placed in 16000 call and 15000 put options. However, since 15000 is far
from the current market price, more weightage should be given to 15500 put option which also has decent build up.
Post some volatility at the start of the week, Nifty recovered from the lows and marked a record of 15900. However, we witnessed
some cool-off from the highs and the index corrected to sneak below 15500 on Friday. Due to recovery in the later half on the last
day, Nifty managed to end the week tad below 15700. Nifty corrected mainly because of profit booking as the open interest declined
by more than 17 percent ahead of the monthly expiry week. Bank Nifty which has been an underperformer recently, added some
shorts during the week. FII’s were long heavy at the end of last week with their ‘Long Short Ratio’ at 82 percent; but they unwound
some of their longs and added shorts which has now brought this ratio down to about 68 percent. Decent built up was seen in call
options which indicates resistance around 15800 followed by 16000 mark for the coming week. On the flipside, 15500-15450 would
be seen as the immediate support.
Weekly change in OI
Short Formation
Chg (%)
LICHSGFIN 14362000 46.55 470.45 (10.30)
Long Formation
Chg (%)
MARICO 6196000 22.50 521.75 5.87
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Technical and Derivatives Review
| June 18, 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