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Technical and Derivatives Review | January 24, 2020
Market jolts ahead of budget, but manages to regain strength
Sensex (41613) / Nifty (12248)
Source: Trading View
Future outlook
The starting point of the week gone by was excellent as the pre-open suggested a bumper opening at records highs on Monday;
courtesy to gap up opening in two major index movers (RIL and HDFC Bank ) after posting their quarterly numbers over the
weekend. But this ecstasy at the opening was flatter to deceive. Markets started coming off fiercely right from the word go, in fact
the selling aggravated as the day progressed to conclude with sharp cuts. This negativity continued for subsequent two sessions to
slide towards the 12100 mark. Fortunately, the mighty bulls came for a rescue and were successful in pulling the market higher to
end the week well above 12200.
It seems that looking at the recent behaviour, market is giving full justice to the famous phrase ‘All’s well that ends well’. Technically
speaking, we reversed precisely from a crucial juncture. Firstly, the support of 12100 was placed at the 61.8% Fibonacci retracement
of the recent up move from 11929.60 to 12389.05 (proper traded high). And second but most important observation was the
convergence of ‘Upward Sloping Trend Line’ drawn by joining recent swing lows with the low of 10670.25. Now, the forthcoming
week would be crucial for our market as we are heading for one of the mega events, Union Budget slated on 1st February. So, most
probably we are likely to see an action packed week especially for individual stocks.
As far as Nifty is concerned, we may see Nifty going back to 12300 12390 ahead of the budget and a positive outcome would
enable it crossing this sturdy wall of 12400 convincingly. On the flipside, 12200 followed by 12150 would be seen as a sacrosanct
support zone. Last week we had mentioned about ‘Midcap’ index entering an overbought zone and possibility of some breather
cannot be ruled out. In line with this, initial part of the week, index remained sideways and was clearly bucking the trend by not
correcting as much as our benchmark did. And once they settled, the ‘Midcap’ universe resumed its uptrend, which is likely to
extend further.
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Technical and Derivatives Review | January 24, 2020
Index recovers from support, biasness remains positive
Nifty spot closed at 12248.25 this week, against a close of 12352.35 last week. The Put-Call Ratio has decreased from 1.46 to 1.42.
The annualized Cost of Carry is positive at 11.60%. The Open Interest of Nifty Futures has decreased by 1.66%.
Derivatives View
Nifty current month future closed with a premium of 23 points against a premium of 32.30 points to its spot. Next month future is
trading with a premium of 61.25 points.
As far as Nifty options activities for the week are concerned, we saw fresh build-up in 12200-12500 call options. On the other side,
build-up was seen in 12100 and 12200 puts. Maximum open interest for the monthly series now stands at 12000 put and 12500 call
Post starting on a positive note, the indices corrected during the first three trading sessions. During this fall, short positions were
built in the Bank Nifty index. However, Nifty managed to find support around the 12100 mark and it pulled back higher in last couple
of trading sessions. The open interest activity indicates a resistance for Nifty in the range of 12400-12500, whereas support is placed
around 12200 and 12100 mark. We expect the index trade within this broad range before the announcement of the Union Budget
on February 1
. Traders are advised to use dips as buying opportunities and trade with a positive bias. Since the banking space has
seen some underperformance in the recent past, we could see some short covering move in this space.
Long Formation
Chg (%)
Chg (%)
VOLTAS 4682000 28.03 725.40 2.42
NIITTECH 1089750 26.13 1925.90 7.58
EQUITAS 23034900 22.45 110.85 4.72
BATAINDIA 2562450 15.95 1852.30 3.17
JUSTDIAL 2556400 15.86 609.95 4.68
Weekly change in OI
Short Formation
Chg (%)
Chg (%)
OIL 9517200 95.12 140.80 (10.32)
COALINDIA 37157400 75.25 193.85 (6.94)
NTPC 87734400 60.00 114.50 (5.49)
BEL 41376000 43.16 101.85 (6.39)
ONGC 57100700 32.71 118.00 (5.79)
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Technical and Derivatives Review | January 24, 2020
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