For Private Circulation Only
Technical and Derivatives Review
|July 24, 2020
Nifty ends higher despite some intra-week reality checks
Sensex (38101) / Nifty (11194)
Source: Trading View
Future outlook
The stage was set previous Friday when our markets had a late surge to surpass the recent hurdle of 10850 on a closing basis. Hence,
with global markets showing some favorable cues, we had a cheerful start for the week gone by on Monday at 11000, marking the
highest level since March 06, 2020. This momentum extended on the following day as we witnessed yet another gap up opening to
extend this lead. However, post this, markets had some reality checks in between to remain in a slender range throughout the
remaining part to conclude the week tad below 11200 mark. The banking index was one of the major charioteers in this extended
move, barring Friday, when banking space has undergone some selling pressure to pare down a decent portion of their weekly gains.
In continuation of our previous weekly commentary, our desired levels of 11200 has now been met. But since, there are multiple
technical observations that coincide around it, markets will have a daunting task in front of them now. Since, we are extremely
overbought, we are in two minds whether to go with the theoretical characteristic of this term ‘overbought’ or the practical one.
Because, theoretically, the current placement (78% retracement of the post COVID fall which coincides with 100% ‘price extension’
of recent swings from March bottom) of market is just ideal to see some genuine correction; but practically as we all know, market
has the tendency to surprise us all the time. Hence, rather anticipating things from here on, we would rather let the market give us
further indication. As we step into the monthly expiry week, our eyes would be on a few crucial levels. On the upside, 11250 is the
level to watch out for; whereas, 11050 has now become a key support. As an optimist, one should remain hopeful as long as we are
trading above this swing low (B) and expect the market to give breakout in upward direction to extend the move towards 11350
11400. However, a breach of lower end should be treated as a short-term pause to see some decent profit booking.
We continue to advise traders to remain light and keep booking profits wherever it's necessary. Also, if our markets have to see any
upward move, the banking space plays a vital role in this. Hence, one needs to see whether BANKNIFTY manages to convincingly go
beyond 23000-23200 or not in the forthcoming week.
For Private Circulation Only
Technical and Derivatives Review
|July 24, 2020
FII’s started buying in equities
Nifty spot closed at 11194.15 this week, against a close of 10901.70 last week. The Put-Call Ratio has decreased marginally from 1.75
to 1.74. The annualized Cost of Carry is negative at 12.99%. The Open Interest of Nifty Futures has increased by 7.46%.
Derivatives View
Nifty current month future closed with a discount of 23.90 points against a premium of 3.35 points points to its spot. Next month
future is trading at a discount of 15.95 points.
As far as Nifty options activities for the week are concerned, we witnessed open interest addition in 11200-11600 call options
whereas good amount of additions was also seen in 11100-10700 put options. Maximum open interest for the monthly series is at
11500 call option and 11000 put option.
Nifty started the week on a positive note to surpass the 11000 mark with formation of long positions. However, the index witnessed
some consolidation in last couple of sessions to end tad below 11200. During the week, the Nifty PCR went upto 1.87 which is
considered as overbought zone. The PCR has ended at 1.74 which is still overbought, hence traders are advised to be vigilant on this
data. FII’s were net buyers in cash segment throughout the week, but they formed mixed positions in index futures. The options data
hints support at 11000 mark as the put option of this strike has good amount of open interest outstanding. For the coming week,
11000-11200 seems to be the immediate trading range. Considering the above data, traders are advised to trade with a stock
specific approach at the start of the week and watch for further developments as we approach the monthly expiry.
Weekly change in OI
Short Formation
Chg (%)
ZEEL 34185000 46.31 151.90 (3.86)
Long Formation
Chg (%)
RAMCOCEM 1569100 22.74 685.45 3.60
For Private Circulation Only
Technical and Derivatives Review
|July 24, 2020
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]ng.com
Ruchit Jain Senior Analyst - Technical & Derivatives ruchit.jai[email protected].com
Rajesh Bhosale Technical Analyst rajesh.bhosl[email protected]ng.com
Sneha Seth Derivatives Analyst [email protected]gelbroking.com