Technical and Derivatives Review | May 24, 2019
Market cheers second reign for PM Modi, finally party begins for mid and small caps
Sensex (39435) / Nifty (11844)
Source: Trading View
Future outlook
This has been a splendid week for our market and the kind of comeback we made, is quite remarkable. Importantly, the global markets had
no influence over it as the rally was mainly led by the domestic factors. This all started with a massive bump up at the opening on Monday
after exit polls indicating the BJP led NDA government back in power with thumping majority. This was followed by couple of muted
sessions ahead of the final verdict. On the actual day, we saw tremendous optimism to reach yet another milestone of 12000 as the
counting finally validated the exit poll numbers. However, index suddenly took a nosedive and before anyone could realize, we were well
off highs. Fortunately, the concluding session brought back cheerful mood across the board to reclaim the 11800 mark.
Practically speaking, only the first and the last day of the week had some notable development. On the event day, there was massive
volatility with wild swings being witnessed. We are back to comfortable zone now; courtesy to Friday’s spectacular upsurge. This move was
crucial for our market as it negated the possibility of forming a ‘Shooting Star’ pattern on weekly chart, which would have probably turned
ominous if we had a close below 11750 - 11700. But as we generally say ‘All’s well that ends well’. Going ahead, Monday’s gap area of
11591.70 - 11426.15 is now likely to act as a sheet anchor and we do not expect Nifty to go below this in the near future. Since, we have
confirmed a breakout on ‘Line chart’ in weekly time frame, we expect Nifty to reach and even go beyond the 12000 mark quite soon.
Last week we had clearly stated about the ‘Midcap’ index which was in a last phase of its time as well as price wise correction. We have
already seen a good leap from lows and expect further legs to unfold, which will eventually bring back the wider smile on many traders’/
investors’ faces. Going ahead, we may not see the similar kind of outperformance from previous index drivers and the focus is now likely to
shift on mid and small cap universe as we expect the party to begin after a long underperformance.
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Technical and Derivatives Review | May 24, 2019
11600-11650 to act as a sheet anchor
Nifty spot closed at 11844.10 this week, against a close of 11407.15 last week. The Put-Call Ratio has decreased from 1.36to 1.23.
The annualized Cost of Carry is positive at 12.99%. The Open Interest of Nifty Futures has increased by 23.20.
Derivatives View
Nifty current month future closed with a premium of 25.30 points against a premium of 18.65 points to its spot. Next month future
is trading with a premium of 62.55 points.
As far as Nifty options activities for the week are concerned, some fresh build-up was seen in 11100-12500 call options. On the other
side, 11400 - 11800 put options added some fresh OI. Maximum open interest for monthly May series now stands at 12500 call and
11000 put options.
We certainly had a roller-coaster ride last week, the benchmark index opened with an upside gap as exit poll results were in favor of
BJP. We saw strong move on Monday which was followed by profit booking. On Thursday, Nifty registered a fresh record high and
surpassed the magical figure of 12000; however, these gains were short lived as good amount of profit booking was seen thereafter
to correct towards 11600 mark. Finally, some respite from the support zone of 11550-11600 on the final day of the week led closing
tad above 11800 mark. The correction seen was mainly due to profit booking, good amount of long formed earlier are still intact in
the system. Looking at the sharp recovery on Friday and options activity, we expect further upside towards 12000 going ahead.
Long Formation
Short Formation
Chg (%)
Chg (%)
Chg (%)
Chg (%)
Weekly change in OI
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Technical and Derivatives Review | May 24, 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
For Technical Queries
E-mail: [email protected]
For Derivatives Queries
E-mail: [email protected]
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