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Technical and Derivatives Review | March 27, 2020
Some respite after recent turmoil, 8000 becomes key support
Sensex (29816) / Nifty (8660)
Source: Trading View
Future outlook
Last Friday’s decent recovery was followed by a huge gap down on Monday as there was sudden spike seen across the globe as well as in
India in corona virus infected numbers. The sell off along with global peers augmented to hit a fresh 3-year low at 7511.10. Things looked
extremely scary at one point as so many stocks were falling as if there is no tomorrow. Few all time favorites like HDFC Bank, Bajaj Finance
etc. considered as a safe haven stocks also had to succumb to this melt down. Fortunately, the global markets saw sharp recovery
thereafter which resulted into a respectable rebound in our market as well. Eventually, the Nifty ended the action packed week by paring
down almost all losses.
Barring Monday’s mayhem, our markets managed to clock gains for four consecutive sessions, which was rare to see in last couple of
months. But practically speaking, all markets across the globe were extremely oversold and hence they needed some reason to rebound.
Globally the relief move started after the announcement of hefty stimulus packages from US Federal Reserve. Looking at the governments
and central banks’ efforts worldwide, hopes were built for similar sort of measures from our Finance ministry and RBI as well to support the
economy. Finally, the sell off arrested and we are now considerably off Monday’s low. Technically speaking, the Nifty has managed to close
above ‘5-day EMA’ after so many days. In addition, the RSI-Smoothened on daily chart has confirmed a classical positive crossover from
deeply oversold position. Purely looking at these observations, a possibility of extending this relief move towards 9150 9350 cannot be
ruled out. But as we all know, we are currently in a very abnormal phase and hence, all conventional theories of market research can go for
a toss. So rather than blindly depending on these pointers, the real path of action would be decided on how things pan out with respect to
the corona virus pandemic.
As far as supports are concerned, 8500 followed by 8000 would be seen as key supports. Traders are advised not to take aggressive /
leveraged bets and should ideally keep booking profits on a regular basis. For a time being, the strategy would be to take one step at a time
and keep focusing on quality names. The entire world is fighting against this health crisis and we hope it disappears soon.
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Technical and Derivatives Review | March 27, 2020
Lower rollovers in index futures
Nifty spot closed at 8660.25 this week, against a close of 8745.45 last week. The Put-Call Ratio has increased from 1.19 to 1.23. The
annualized Cost of Carry is negative at 1.10%. The Open Interest of Nifty Futures has decreased by 45.16%.
Derivatives View
Nifty current month future closed with a discount of 8.85 points against a premium of 8.95 points to its spot. Next month future is
trading with a premium of 17.10 points.
As far as Nifty options activities for the week are concerned, we did not witness any significant activity in the options segment due to
high IV’s. Maximum open interest for the monthly series now stands at 10000 call option and 7500 put option.
During the week, the indices continued the sell-off on Monday and registered a low around the 7500 mark. However, we witnessed
short covering move in last couple of sessions before expiry due to which Nifty rebounded sharply and ended the week at 8660. The
rollover in Nifty is at 62.12% v/s 3-month average of 68.69%, whereas in BankNifty it is at 55.19 percent v/s 3-month average of
64.10%. This indicates that much of the short positions formed have been covered and has not been rolled to the April series. FII’s
‘Long Short Ratio’ in the index futures segment is now at 29.63 percent and they are light on positions. India VIX has cooled off
a bit from the highs of 86 but it’s still trading around 70 which indicates that volatility is likely to continue. Until we see a significant
cool-off in the IV’s, the range for the index will continue to be high and hence, traders are advised to properly manage the risk and
book profits as we approach the higher end of the range.
Long Formation
Scrip
OI
Futures
Chg (%)
Price
Price
Chg (%)
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Weekly change in OI
Short Formation
Scrip
OI
Futures
Chg (%)
Price
Price
Chg (%)
M&MFIN 9300800 4.81 162.25
(22.68)
M&M
13796000
1.95
296.50
(8.28)
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Technical and Derivatives Review | March 27, 2020
Research Team Tel: 022 - 39357600 Website: www.angelbroking.com
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.cha[email protected]g.com
Ruchit Jain Technical Analyst ruchit.jain@angelbroking.com
Rajesh Bhosale Technical Analyst rajesh.bhosl[email protected]ng.com
Sneha Seth Derivatives Analyst [email protected]gelbroking.com
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