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Technical and Derivatives Review | February 20, 2020
Despite some uncertainty, 12000 defended successfully
Sensex (41170) / Nifty (12081)
Source: Trading View
Future outlook
We had a shaky start for the week as some overhang continued of what we saw previous Friday with respect to the AGR case. In addition to
this, things related to coronavirus aggravated which had a rub off effect on all global peers. Thus, market looked nervous in first half of the
week to retest 11900 levels. Fortunately, bulls pounced on this opportunity quite aggressively and as a result, we witnessed a v-shaped
recovery thereafter to reclaim the 12000 mark on a weekly closing basis.
We have already mentioned in our intra-week reports how crucial that recovery was on Tuesday. Let us see what these technical
observations are. On Tuesday all major indices formed a ‘Bullish Hammer’ pattern on daily chart and for Nifty it was placed at the 50%
retracement of the recent up move. Now we have moved one step forward as we can see the Tuesday’s ‘Hammer’ pattern along with
Monday’s and Wednesday’s candle, combinedly gives a birth to a ‘Bullish Island Reversal’ pattern. This configuration occurs when the
previous gap is precisely filled by yet another gap but in the opposite direction and has extremely bullish implication. Hence, going forward,
as long as we do not enter into Wednesday’s gap area of 12042.10 – 12030.75, the said pattern remains intact and is likely to provide some
impetus to the next leg of the rally. In the forthcoming week, once Nifty surpasses 12160, we may see Nifty retesting of 12220 12250
levels. On the downside, 12042 – 12000 remains a strong support zone.
The banking index has been slightly underperforming since few days but on Thursday we witnessed a sheer outperformance from this
space courtesy to a smart move in SBI and Indusind Bank. Apart from this, the midcap space looked vibrant in last couple of days and has
managed to give a v-shaped recovery. Hence, we may see good traction in this universe in coming days as well.
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Technical and Derivatives Review | February 20, 2020
11900-12000 is an important support zone
Nifty spot closed at 12080.85 this week, against a close of 12113.45 last week. The Put-Call Ratio has decreased from 1.28 to 1.12.
The annualized Cost of Carry is negative at 0.80%. The Open Interest of Nifty Futures has increased by 1.59%.
Derivatives View
Nifty current month future closed with a discount of 1.85 points against a discount of 16.20 points to its spot. Next month future is
trading with a premium of 12.80 points.
As far as Nifty options activities for the week are concerned, we saw fresh build-up in 12000-12300 call options. On the flip side,
decent amount of writing was seen in 11800-12100 put options. Maximum open interest for the monthly series now stands at 12000
put and 12200 call option.
Post come consolidation seen in the previous week, the benchmark index corrected almost towards 11900 mark; but, managed to
reclaim 12000 on the same day. This upmove was then followed by fresh buying interest to extend the rally above 12150; however,
some profit booking on Thursday led closing 0.42% lower to the previous week’s close. We hardly saw any relevant open interest
activity in Nifty futures; however, banking index managed to conclude the week marginally higher with almost 8% open interest
reduction. In options front, 12000 put and 12200 call options are attracting trader’s attentions. Considering the above data points,
we don’t see any major downside from here on; hence, traders are advised using decline to add-on fresh longs in the system.
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg (%)
MINDTREE 1392800 50.87 1033.30 7.74
IDEA 660814000 44.98 4.45 28.99
VOLTAS 4372000 32.61 727.25 5.64
TORNTPHARM 501500 25.22 2236.80 6.01
SRTRANSFIN 6667200 16.37 1317.30 3.28
Weekly change in OI
Short Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg (%)
LICHSGFIN 16304600 37.76 365.55 (11.69)
YESBANK 352220000 27.77 34.45 (8.62)
IGL 13002000 27.71 466.50 (4.72)
RBLBANK 17592000 23.23 309.75 (2.30)
TATAGLOBAL 18719100 21.48 381.60 (4.00)
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Technical and Derivatives Review | February 20, 2020
Research Team Tel: 022 - 39357600 Website: www.angelbroking.com
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.c[email protected]broking.com
Ruchit Jain Technical Analyst ruchit.jain@angelbroking.com
Rajesh Bhosale Technical Analyst rajesh.bhosle@angelbroking.com
Sneha Seth Derivatives Analyst sneha.set[email protected]ng.com