1
For Private Circulation Only
Technical and Derivatives Review
| December 19, 2020
Bulls reluctant to give up; Nifty ends above 13750
Sensex (46961) / Nifty (13761)
Source: Trading View
Future outlook
Nifty started the week tad below 13600 and consolidated in a narrow range for initial couple of sessions. But the positive global
market sentiments then provided an impetus to the ongoing rally and the index continued it uptrend for the rest of the week to
clock new records and end above 13750.
The bulls seem to be reluctant to give up and hence, we have seen intraday dips were getting bought into throughout the week.
Nifty is trading all time high and although there’s no limit on the upside, reciprocal retracements usually indicates where the
markets could resist in such a trend. If we observe positional charts and take retracements of the previous corrections, then 127%
retracement of the previous correction from 12430 to 7511 comes around 13770 and that is where Nifty is placed right now. On the
other hand, the RSI-smoothened oscillator is trading at level above 95 on the daily chart which is a highly overbought zone. Usually,
when the momentum readings are in such overbought zone and market approaches resistance, it leads to either a price-wise or a
time-wise correction in short term. Hence, we advise that traders should avoid getting carried away now and avoid aggressive
buying at current levels. Infact, booking profits on existing longs and taking some money off the table is also recommended. Having
said that, one should not give less importance to the price structure which has not yet given any signs of reversal. Hence, for the
coming week, focus would be more on the price action and we would wait for indications from that front.
The banking index which has resumed its rally and has outperformed in last couple of months has now been facing resistance
around the 31000 mark. As far as Nifty levels are concerned, 13770-13800 is the immediate resistance as per the retracement
theory mentioned above. If the index moves beyond this range, then it would eye the 14000 mark for the first time ever. On the
flipside, 13650 is the immediate support which if breached, then it could result in some profit booking and drag the index towards
13500-13470.
2
For Private Circulation Only
Technical and Derivatives Review
| December 19, 2020
Stretched PCR-OI hints sign of caution
Nifty spot closed at 13760.55 this week, against a close of 13258.55 last week. The Put-Call Ratio has increased from 1.57 to 1.77.
The annualized Cost of Carry is positive at 2.75%. The Open Interest of Nifty Futures has increased by 9.87%.
Derivatives View
Nifty current month future closed with a premium of 13.50 points against a premium of 53.05 points to its spot. Next month future
is trading at a premium of 53.40 points.
As far as Nifty options activities are concerned, we saw some build-up in 13900-14400 call options. On the put side, 13500-13700
strikes added decent build-up and we believe these are short positions. Maximum open interest for the monthly series is placed at
14000 call and 13700 put options.
Last week, we witnessed some consolidation for the initial two sessions. However, smart buying was seen thereafter to rally beyond
13750 mark. In F&O segment, the upmove seen in Nifty was supported by long positions. In case of banking index, no major build-up
was seen in the week gone by. In options front, we witnessed strong writing in Nifty puts which resulted in PCR-OI surging to 1.77. At
present, this ratio is on the higher side and thus, hints market is overbought now. FIIs continued exiting from long and
simultaneously preferred adding shorts in index futures; their ‘Long Short Ratio’ has plunged to 68% from 80% seen during start of
December series. Considering the above data point, we expect some profit booking soon and hence, would advise trader’s to keep
booking profits.
Weekly change in OI
Short Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
PNB 215346000 96.91 33.55 (14.41)
ESCORTS 3519450 27.90 1339.15 (1.96)
TATACHEM 7692000 17.54 491.75 (3.71)
INDUSINDBK 18810300 12.47 907.30 (1.89)
INDIGO 3069000 10.91 1653.70 (4.34)
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
POWERGRID 25996000 36.02 194.15 2.37
MFSL 8080800 29.96 651.05 2.64
ASHOKLEY 40887000 20.31 98.60 4.34
IBULHSGFIN 25692800 15.16 203.85 5.54
NATIONALUM 59245000 11.06 43.75 2.10
3
For Private Circulation Only
Technical and Derivatives Review
| December 19, 2020
Research Team Tel: 022 - 39357600 (Extn – 6844) Website: www.angelbroking.com
For Technical Queries E-mail: [email protected]
For Derivative Queries E-mail: [email protected]
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager and Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking
Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration
number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for
accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits
and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]ng.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