Technical and Derivatives Review | August 23, 2019
Some respite on last day to reclaim 10800
Sensex (36701) / Nifty (10829)
Source: Trading View
Future outlook
Last week we closed with some hopes of a relief rally and on Monday, the proceedings began on expected lines. But at higher levels,
market faced a sturdy wall around 11150, which resulted into a moderate decline for next couple of days. However, on Thursday, things
became worse as we witnessed a relentless sell off to slide below recent swing low of 10782.60. On Friday, index continued its selling
streak and gave a sharp correction to sneak below the 10650 mark. Fortunately, a strong buying emerged at lower levels in the following
hour and thereafter, index had a v-shaped recovery to not only trim all losses but also to enter a positive territory and reclaim the 10800
mark.
Recent correction got arrested in the first week of August and then index went into a consolidation mode. But early this week, the sell-off
triggered once again to breach key support levels. But since we were extremely oversold and reached crucial February lows around 10600,
market took a complete U-turn and was off lows considerably. Now technically speaking, we can see a formation of ‘Bullish Piercing’
pattern on daily chart (in Nifty). The said pattern will show its significance once index manages to sustain above 10900. In this scenario, we
can expect further recovery towards 11050 - 11150. The banking index was a bit underperforming amongst the two indices and if Nifty has
to regain any strength, banking index needs to step up. Hence, one needs to closely watch how banking conglomerates perform in the
forthcoming week. For Nifty, the support now can be seen around 10728 - 10637. In case of breaching these crucial supports, we can see
extended correction in the market.
Apart from this, the broader market was clearly the shining pocket on Friday along with some other sectoral movers. The ‘Nifty MIDCAP 50’
confirms a ‘Bullish Engulfing’ pattern on daily chart and the way it’s shaped up, we can witness sharp short covering moves in the broader
market if Nifty manages to give decent recovery. At this juncture, traders are advised to keep a tab on all these possibilities and should act
accordingly.
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Technical and Derivatives Review | August 23, 2019
Expect further short covering in the expiry week
Nifty spot closed at 10829.35 this week, against a close of 11047.80 last week. The Put-Call Ratio has decreased from 1.21 to 1.02.
The annualized Cost of Carry is positive at 7.50%. The Open Interest of Nifty Futures has increased by 4.34%.
Derivatives View
Nifty current month future closed with a premium of 13.35 points against a premium of 16.85 points to its spot. Next month future
is trading with a premium of 51.35 points.
As far as Nifty options activities for the week are concerned, we saw good amount of build-up in 10800-11100 call options. On the
other side, 10800-11000 puts sheds decent amount of positions. Maximum open interest for the monthly series now stands at
11000 call and 10700 put option.
During the week, for the first four consecutive sessions we witnessed sharp sell-off to test previous lows around 10800 mark and
correct towards 10650. On Friday, market corrected in the initial hour but latter on we witnessed sharp recovery in single straight
session to rebound above 10800 on closing basis. As far as positions are concerned, we believe huge amount of shorts are still intact
in the system. The PCR-OI plunge to 0.70 on Thursday, which also indicated market has entered over sold trajectory. The kind of
recovery seen on Friday; we expect this short covering rally to extend towards 11000-11100.
Long Formation
Short Formation
OI
OI
Price
OI
OI
Price
Scrip
Price
Scrip
Price
Futures
Chg (%)
Chg (%)
Futures
Chg (%)
Chg (%)
MGL
3477000
162.57
838.05
5.75
NMDC
35556000
33.35
80.20
(22.06)
NESTLEIND
449000
17.20
12448.05
3.63
LICHSGFIN
10891100
28.70
424.95
(11.84)
MARUTI
3589125
12.57
6241.85
4.63
BAJAJFINSV
1055750
20.99
6896.25
(7.49)
JUBLFOOD
3032500
9.62
1142.90
2.90
ITC
113776800
18.54
236.50
(6.71)
APOLLOTYRE
10128000
6.10
165.25
1.72
INDUSINDBK
12270000
18.26
1312.70
(8.76)
Weekly change in OI
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2
Technical and Derivatives Review | August 23, 2019
Technical and Derivatives Team:
Sameet Chavan
Chief Analyst - Technical & Derivatives
[email protected]
Ruchit Jain
Technical Analyst
[email protected]
Rajesh Bhosale
Technical Analyst
[email protected]
Sneha Seth
Derivatives Analyst
[email protected]
Research Team Tel: 022 - 39357600
Website: www.angelbroking.com
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E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
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Technical and Derivatives Review | August 23, 2019
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