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Technical and Derivatives Review
| December 24, 2020
Markets back to record highs despite initial collapse
Sensex (46974) / Nifty (13749)
Source: Trading View
Future outlook
Despite being a truncated week, it was certainly an action packed as well as the volatile one for our markets, unlike recent weeks.
On the inaugural day, Nifty marked a fresh record high of 13777.50 in the initial hours. However, post this, it just turned out to be a
nightmare for the Bulls. The entire market just collapsed in a matter of a few hours on some global jitters to register the biggest
intraday loss in the last few months. In the process, Nifty had a massive cut of more than 600 points to enter sub-13200 levels. But
mighty Bulls were not willing to surrender completely as we witnessed a v-shaped recovery in the following three trading sessions to
reclaim it's all time high territory.
It appears that our markets over reacted to the global development on Monday but they also remained in the front in the recovery
mode as well. It looks unrealistic but we have managed to shrug off the negativity and restricted the correction to merely one and
half days. Technically, the low during the corrective move precisely met with a strong support zone of the '89-EMA' level on the
'180-minutes' chart. And as we alluded in our intra-week commentary, although the fall was intimidating, it was merely a correction
within the larger Bull market. We are now back to record highs and the coming week would be quite crucial to understand whether
the Nifty is heading towards 14000 or not. A sustainable move beyond 13780 - 13800 would lead to a continuation of the
move towards 14000 - 14200 levels.
On the flipside, 13626 is the level to watch out for. If we again slide below this support, we may see some corrective move in the
concluding week of the current calendar year. Let see how things pan out because the last week of the year is generally considered a
muted one in the absence of Foreign Institutional investors. This week mainly the defensive spaces like IT, Pharma and FMCG
initiated the recovery, so it would be important to see what drives the market going ahead.
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Technical and Derivatives Review
| December 24, 2020
13600-13700 puts added decent shorts
Nifty spot closed at 13749.25 this week, against a close of 13760.55 last week. The Put-Call Ratio has decreased from 1.62 to 1.58.
The annualized Cost of Carry is positive at 5.50%. The Open Interest of Nifty Futures has decreased by 7.68%.
Derivatives View
Nifty current month future closed with a premium of 14.50 points against a premium of 13.50 points to its spot. Next month future
is trading at a premium of 56.30 points.
As far as Nifty options activities are concerned, we saw fresh build-up in 13700-14500 call options (except for 14400 strike wherein
some unwinding was seen). On the other side, decent amount of writing was seen in 13600 and 13700 put strikes. Maximum open
interest concentration is now seen in 13000 put and 14000 call options.
It was indeed a historical week for the Indian equity market, as index registered fresh record high in the early morning trade on
Monday but these gains were short lived as sharp sell-off was seen to plunge below 13200 mark. In next three sessions, V-shaped
recovery was seen to erase all of losses to conclude the week marginally lower. In the correction seen on Monday, we hardly saw
any fresh shorting but in the recovery seen fresh longs were formed. In addition, we also witnessed good amount of writing in 13600
and 13700 put strikes; which is a positive indication. Going ahead, we may see index extending the rally towards 13900-14000 mark;
whereas, 13600-13700 levels may act as a demand zone for Nifty now.
Weekly change in OI
Short Formation
Scrip
Futures
OI
Chg (%)
Price
Price
Chg(%)
PVR 2115179 40.50 1259.00 (11.82)
ONGC 56941500 19.45 93.20 (6.28)
RBLBANK 19432000 19.09 219.85 (3.21)
HAVELLS 4304000 18.47 897.60 (2.54)
RAMCOCEM 1762900 17.91 779.35 (7.69)
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
IDEA 983780000 38.79 10.15 3.05
CADILAHC 9840600 28.57 491.40 2.73
IGL 6776000 10.94 489.85 2.17
ICICIPRULI 4519500 8.07 497.35 2.97
ADANIENT 18894000 7.89 473.45 3.69
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Technical and Derivatives Review
| December 24, 2020
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Technical and Derivatives Team:
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