Technical and Derivatives Review | October 19, 2019
For Private Circulation Only
Nifty near recent highs, banking space needs to step up now
Sensex (39298) / Nifty (11662)
Source: Trading View
Future outlook
Our markets had a flat start for the week gone by as there were no major triggers on the domestic as well as global front. With some
intraday volatility, Nifty managed to gradually head higher. However, last couple of sessions have been excellent as we finally witnessed
some trended moves to hasten towards recent swing highs. This positivity was mainly on the back of easing off some global concerns with
respect to Sino-US trade war and long awaited BREXIT deal’. Eventually, Nifty managed to conclude the week on a high note by adding
more than three percent to the bull’s kitty, becoming the highest weekly gains after November 02, 2018.
Last few days have been lethargic in terms of index movement but if we look at it meticulously, the overall breadth has improved drastically
and the way institutional buyers finally started participating, it seems to be forming some platform for the near future. Although the recent
movement has not been so swift, with last two day’s strong move, we are back to recent highs. And to provide some credence to this
development, the recent underperformer banking index, seems to have come out of its slumber on Thursday. On the daily chart, we can
see prices finally surpassing the psychological barrier of 11600 which coincides with very important neckline of ‘Inverse Head and Shoulder’
pattern. We have been upbeat in recent declines also and now after confirming this breakout, we will not be surprised to see this rally
extending towards 11800 - 11900 first and then a continuation beyond 12000 also cannot be ruled out. On the flipside, 11550 11480
would now be seen as immediate support base for the index.
We had a good broad based rally during the second half of the week and more importantly some of the event sensitive stocks had shown
bottoming formation. Traders can certainly keep a watch on such potential propositions, who can certainly give some extended moves.
Clearly, Auto and Metal who were hammered down brutally over the past few months have finally shown stupendous moves. The only
disappointing factor in last week’s rally was the relative underperformance from the banking index. Although, it showed sign of coming out
of congestion zone but it is certainly lacking the kind of flamboyance it generally shows in every robust rally. Hence, if we Nifty have to
extend the rally towards 12000 or beyond, the banking space needs to step up and prove its significance.
Technical and Derivatives Review | October 19, 2019
For Private Circulation Only
FII’s turn buyers, support base shifts higher
Nifty spot closed at 11661.85 this week, against a close of 11305.05 last week. The Put-Call Ratio has increased from 1.14 to 1.44.
The annualized Cost of Carry is positive at 1.96%. The Open Interest of Nifty Futures has decreased by 4 %.
Derivatives View
Nifty current month future closed with a premium of 8.15 points against a premium of 40.35 points to its spot. Next month future is
trading with a premium of 51.20 points.
As far as Nifty options activities for the week are concerned, we witnessed decent unwinding in 11300-11500 call options, which
indicates that the call writes covered their positions as the index moved higher. On the flipside, 11500-11300 put options added
good amount of open interest which indicates put writing. Maximum open interest for the monthly series now stands at 11700 call
and 11000 put option.
During the previous week, we witnessed some short covering in both Nifty as well as Bank Nifty. During this week, the indices
showed strength and the Nifty ended well above the 11600 mark. The Bank Nifty index witnessed further short covering as
unwinding was seen with upmove in price. In options segment, the call writers ran for cover and squared off their positions whereas
fresh put writing was seen. Also, FII’s who have been selling equities since last few months turned buyers in cash segment and
bought equities worth more than Rs.3200 crores in this week. In Futures segment, they covered their short positions and added
some fresh longs as well. Analyzing all this data, we continue to remain optimistic on our markets and expect the indices to show
further strength in coming days. As per options data, 11600-11500 is seen as the immediate support range for the index. Hence,
traders are advised to continue to trade with a positive bias.
Long Formation
Chg (%)
Chg (%)
BERGEPAINT 8404000 26.32 490.10 7.77
ADANIENT 32056000 21.37 175.70 28.06
BHEL 59430000 17.46 54.55 26.13
TVSMOTOR 9319200 16.71 443.95 14.70
MARUTI 2666700 11.96 7303.35 8.57
Short Formation
Chg (%)
Chg (%)
INDIGO 3813000 41.69 1729.45 (1.40)
TATAPOWER 49104000 21.27 60.20 (1.87)
INFY 50722800 12.87 759.95 (5.74)
Weekly change in OI
Technical and Derivatives Review | October 19, 2019
For Private Circulation Only
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]angelbroking.com
Ruchit Jain Technical Analyst ruchi[email protected]broking.com
Rajesh Bhosale Technical Analyst rajesh.bhosle@angelbroking.com
Sneha Seth Derivatives Analyst sneha.set[email protected]lbroking.com