1
For Private Circulation Only
Technical and Derivatives Review
| May 22, 2020
Nifty holds 9000 despite some hiccups
Sensex (30673) / Nifty (9039)
Source: Trading View
Future outlook
We had a positive start for the week on Monday, citing the cheerful mood in Asian markets and a good bump up in Dow Futures early in the
morning. However, it was merely a formality as we saw markets taking a complete nosedive in initial trades. Within a blink of an eye, we
not only broke the sheet anchor of 9000 but also hastened towards the 8800 mark. After seeing such a knock, markets recovered gradually
throughout the remaining part of the week. However, due to some sell off post the ad hoc press conference by RBI on Friday, markets came
off a bit from the morning highs. Fortunately, the damage at the close was not so big and hence, Nifty concluded the week with a marginal
cut of a percent.
The most tracked and tradable indices, Nifty and Bank Nifty have shown some diverging moves in the last few weeks. In fact in the week
gone by, Nifty corrected by merely a percent; whereas the banking index plunged over eight percent. If we look at the recent corrective
move from April 30 high, the Nifty has not even retraced 50% but the Bank Nifty has corrected slightly over 78%. Looking at these
observations, it is very much clear that the banking space has been the pain point and hence, it is not letting our markets move northwards.
Now as far as levels are concerned, we were seeing 9000 as a key support but after seeing breakdown on Monday, we remained a bit
sceptical due to formation of contradictory patterns on an hourly chart. Our scepticism proved correct as we saw Nifty immediately
reclaiming the 9000 mark on a weekly closing basis. So hopes are still alive for the bulls, unless there is some aggravation with respect to
US-China tensions or any other thing related to the Coronavirus pandemic.
For the coming week, all eyes would be on global markets and at our end, 9200 is the level to watch out for. Also, any rally which is mainly
driven by the banking space is considered to be a robust one and hence, if we manages to reclaim 9200 along with the considerably higher
contribution from the banking conglomerates (Bank Nifty hourly chart depicts a positive divergence in RSI-Smoothened), we would see
good relief move in the concluding week of the May month. On the flipside, 8900 – 8800 would be seen as crucial supports for the market.
2
For Private Circulation Only
Technical and Derivatives Review
| May 22, 2020
Key support for index at 9000
Nifty spot closed at 9039.25 this week, against a close of 9251.50 last week. The Put-Call Ratio has decreased from 1.11 to 1.28. The
annualized Cost of Carry is negative at 7.71%. The Open Interest of Nifty Futures has increased by 13.59%.
Derivatives View
Nifty current month future closed with a discount of 11.45 points against a discount of 14.85 points to its spot. Next month future is
trading with a discount of 12.70 points.
As far as Nifty options activities for the week are concerned, we witnessed open interest addition in 9200-9500 call options. On the
flipside, 9000-8800 put options saw open interest additions as well. Maximum open interest for the May monthly series now stands
at 10000 call option and 9000 put option.
Nifty oscillated within the broad range during this week wherein we saw good addition of open interest in 9000-8800 put options.
During the last trading session of the week, Nifty breached the 9000 mark, but it managed to end the week above that. On the
flipside, 9200 is the immediate resistance for the index. For the coming week, a move beyond this range could then lead to a
directional move. FII’s formed mixed position during the week and their ‘Long Short Ratio’ is around 40 percent. Traders are advised
to watch the developments after along weekend and trade accordingly.
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg (%)
BALKRISIND
1060000
44.34
989.10
4.74
AMARAJABAT
1374600
26.30
592.10
3.46
ITC
53968800
25.03
186.80
13.28
DRREDDY
3669250
24.41
3874.15
3.53
IDEA
526456000
18.33
5.60
13.13
Weekly change in OI
Short Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg (%)
EQUITAS 13998600 81.12 40.75
(17.93)
UJJIVAN
5836100
54.96
147.70
(11.08)
ASHOKLEY
72797000
42.40
42.95
(8.62)
CHOLAFIN
9040000
37.60
123.55
(17.27)
L
&TFH
36032000
27.15
51.40
(9.90)
3
For Private Circulation Only
Technical and Derivatives Review
| May 22, 2020
Research Team Tel: 022 - 39357600 (Extn. 6844) Website: www.angelbroking.com
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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 [email protected]ngelbroking.com
Rajesh Bhosale Technical Analyst rajesh.bhosl[email protected]ng.com
Sneha Seth Derivatives Analyst [email protected]gelbroking.com