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Technical and Derivatives Review | March 20, 2020
Some recovery from demonetisation lows
Sensex (29916) / Nifty (8745)
Source: Trading View
Future outlook
Last Friday, our markets locked into a lower circuit for 45 minutes and after resuming the trade, we witnessed a v-shaped recovery of
nearly 17-18% from the lows. Many might have thought the bottom is made and worst is behind us. But market is never as easy as it
appears. The coronavirus pandemic fear aggravated over the weekend and hence global markets again started bleeding. As a result, we not
only tested last Friday’s low but also convincingly breached to see sub-8000 levels, lowest since ‘Demonetisation’. Fortunately for us, we
managed to recover some ground thereafter and eventually concluded the week at 8750 with a severe cut of 12% on weekly basis.
Generally such price action happens when the panic bottom is made. But this time, things have defied all the traditional theories of stock
market and hence it would be hard to decide whether the worst is behind us. It’s better not to pre-empt anything and should keep focusing
on further developments with respect to coronavirus. This week, the major culprit pocket has been the financial space and it is surprising to
see few marquee names like HDFC Bank and Bajaj finance also had to succumb to this meltdown. The law of gravity has finally weighed
down heavily on these all-time favourite names. Thus, we reiterate traders should avoid aggressive bets as well as leveraged trades. For a
time being, better to be with some defensive names like Pharma who has done remarkably well throughout this week.
For the Nifty, 8200 followed by 7832 are the downside supports and on the higher side, extended recovery can be seen after reclaiming
9000 on a sustainable basis. We continue to maintain our stance that these declines are providing opportunities to accumulate quality
stocks in a staggered manner.
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Technical and Derivatives Review | March 20, 2020
FII’s turn buyers in index futures segment
Nifty spot closed at 8745.45 this week, against a close of 9955.20 last week. The Put-Call Ratio has increased from 1.11 to 1.19. The
annualized Cost of Carry is negative at 15.55%. The Open Interest of Nifty Futures has decreased by 11.87%.
Derivatives View
Nifty current month future closed with a discount of 22.35 points against a discount of 57.50 points to its spot. Next month future is
trading with a premium of 8.95 points.
As far as Nifty options activities for the week are concerned, we did not witness any significant activity in the options segment
compared to what we usually witness before expiry week. This may be due to high IV’s in options which make it very risky for the
option traders. Maximum open interest for the monthly series now stands at 10000 call option and 8500 put option.
During the week, the indices continued to witnessed sharp sell-off and the Nifty breached the 8000 mark. However, a recovery in
last couple of sessions led to a close above 8700. During the week, FII’s continued to sell equities in the cash segment. However,
they bought decent amount index futures due to which their ‘Long Short Ratio’ has increased to 41% compared to 22% in last week.
This is a sign of relief as they have turned buyers in the futures segment during the week. India VIX continued to be a concern as it
surpassed the 70 mark on Thursday. It cooled off a bit to end around 67 mark on Friday. Going ahead, while large swings are
expected to continue, we may see some further recovery if the volatility index cools-off further and FII’s start covering their short
positions. Traders are advised to keep a tab on these developments and trade accordingly.
Long Formation
Scrip
OI
Futures
Chg (%)
Price
Price
Chg (%)
ONGC
75886900
4.67
71.30
9.36
PVR
3739600
42.06
1254.30
4.24
DIVISLAB
2108400
3.23
1999.15
1.79
TCS
15082750
8.19
1798.60
0.61
DRREDDY
2120000
7.87
2893.40
0.08
Weekly change in OI
Short Formation
Scrip
OI
Futures
Chg (%)
Price
Price
Chg (%)
BANDHANBNK 9661200 68.40 230.65
(29.71)
INDUSINDBK
19081600
30.71
441.45
(45.12)
UPL
15177600
16.78
301.05
(26.78)
IDFCFIRSTB
182700000
9.79
20.55
(29.86)
CENTURYTEX
2589600
9.07
301.40
(30.70)
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Technical and Derivatives Review | March 20, 2020
Research Team Tel: 022 - 39357600 Website: www.angelbroking.com
For Technical Queries E-mail: [email protected]g.com
For Derivatives Queries E-mail: derivati[email protected]
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]g.com
Ruchit Jain Technical Analyst ruchit.jain@angelbroking.com
Rajesh Bhosale Technical Analyst rajesh.bhosl[email protected]ng.com
Sneha Seth Derivatives Analyst [email protected]gelbroking.com
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