Technical and Derivatives Review | May 25, 2018
Beaten down counters showed some life
Sensex (34925 ) / Nifty (10605)
Source: Trading View
Future outlook
During the week, our markets had a good roller-coaster ride, which must have kept lot of traders on their toes. First half looked very
ominous as we saw index sliding below the important psychological level of 10500. Clearly, it was hard to believe we would reclaim
the 10500 mark immediately on the following day after seeing Wednesday’s massive sell off towards 10400. In fact, the way Friday’s
session panned out, many traders trapped in the recent onslaught finally had something to cheer for. A good stock specific relief
rally towards the fag end of the week resulted into reclaiming the 10600 mark.
Now, the biggest question is whether markets are done with the correction or this is just a temporary bounce back? In our sense,
recently there was a massive stock specific destruction seen in the market and in this course of action, so many individual counters
entered an extreme oversold territory. Hence, some kind of breather was overdue in these names. Last couple of days rally was
mainly a short covering move in these beaten down counters. It may continue also for a while but we believe that this is just a short
term breather and at higher levels index is likely to face resistance in the zone of 10650 - 10720.
For the first half in the forthcoming week, the ideal strategy would be to focus on individual stocks and look to liquidate positions at
higher levels. On the lower side, the immediate support is seen in the range of 10560 - 10500; but if we have to take slightly broader
view, we will not be surprised to see index retesting 10400 - 10300 levels. Further, it would be too early to take this call, but we
believe that the ‘Pharma’ sector is in process of bottoming out. Hence, one can look to accumulate marquee names within this
space.
For Private Circulation Only
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Technical and Derivatives Review | May 25, 2018
Stronger hands writing index put options
Nifty spot closed at 10605.15 this week, against a close of 10596.40 last week. The Put-Call Ratio has increased from 1.36 to 1.47
and the annualized Cost of Carry is negative at 1.58%. The Open Interest of Nifty Futures decreased by 3.03%.
Derivatives View
Nifty current month future closed with a discount of 2.75 points against a premium of 0.65 points to its spot. Next month future is
trading with a premium of 11.05 points.
As far as Nifty options activities for the week are concerned, we saw some open interest addition in 10500- 10600 call options;
followed by unwinding in 10900-11200 strike. On the flip side, 10400 and 10500 put options added decent positions along with
unwinding in 10700-10900 strikes. Maximum concentration for May series has shifted lower from 11000 to 10800; whereas, in put
options is firmly placed in 10500 strike.
As anticipated, we saw some selling pressure which bought index near the support zone; however, recovery was seen in last two trading
sessions to reclaim 10600 mark. In index futures segment, short covering was seen in Nifty; whereas, fresh longs were formed in BankNifty.
Meanwhile, we witnessed massive writing in index put options along with covering of shorts formed in 10500-10700 call options.
Considering the above data points, we expect extension of the ongoing momentum in the expiry week.
Long Formation
Short Formation
OI
OI
Price
OI
OI
Pric
Scrip
Price
Scrip
Price
Futures
Chg (%)
Chg (%)
Futures
Chg (%)
Chg (%
JUSTDIAL
4589200
16.53
508.00
16.41
GRANULES
16885000
8.27
79.80
(16.18)
SBIN
88824000
8.15
267.65
12.27
CENTURYTEX
6802950
9.33
952.50
(10.65)
MCX
3764000
3.49
820.55
8.76
OIL
3415995
18.65
218.05
(10.47)
ALBK
18971000
4.46
40.80
7.94
RNAVAL
38097000
7.27
14.10
(8.74)
CANBK
14012800
14.39
253.95
7.51
MANAPPURAM
20964000
12.82
105.80
(7.11)
Weekly change in OI
2
Technical and Derivatives Review | May 25, 2018
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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