For Private Circulation Only
Technical and Derivatives Review
| May 30, 2020
Nifty reclaims 9500, a sigh of relief for bulls
Sensex (32424) / Nifty (9580)
Source: Trading View
Future outlook
Although the week started on a sluggish note after an extended weekend, our markets saw good buying interest throughout the remaining
part of the week. Till last week, we were considerably underperforming our global bourses, but with this smart rally, we finally got coupled
with global peers. Month on month, we might see index ending lower but looking at the intra-month activity, the Nifty managed to
conclude the May month at the highest of the month (on a closing basis).
Going by the famous idiom ‘all’s well that ends well’, the bulls must be a bit relieved now. Fortunately, at the start of the week, we carried
our bullish inclination after observing a positive divergence in RSI Smoothened in the hourly chart of BankNifty previous Friday. This
anticipation played out well and with weakest link (banking space) taking the charge, the Nifty got elevated beyond 9500 before anyone
could realise. Nifty has now reached to our immediate target of 9450 - 9500, but the way charts are shaped up, we expect the Nifty to test
the higher end of the downside gap area of 9532-9731 created on May 04, 2020 (or may even head higher). On the flipside, 9450 followed
by 9380 would now be seen as a sacrosanct support.
As we have just alluded, this week’s rally is clearly propelled by the banking space and historically it’s proven, whenever the banking
conglomerates starts participating in any rally, it is considered to be a robust one. Hence, traders should look to use declines to go long and
ideally the stock centric approach would fetch better trading opportunities as well as the higher potential gains.
For Private Circulation Only
Technical and Derivatives Review
| May 30, 2020
Short Covering lifts the market in expiry week
Nifty spot closed at 9580.30 this week, against a close of 9039.25 last week. The Put-Call Ratio has increased from 1.28 to 1.61. The
annualized Cost of Carry is negative at 12.16%. The Open Interest of Nifty Futures has increased by 5.17%.
Derivatives View
Nifty current month future closed with a discount of 98.05 points against a discount of 12.70 points to its spot. Next month future is trading
with a discount of 104.70 points.
As far as Nifty options activities for the week are concerned, we witnessed some open interest addition in 9500-10000 call options. On the
flipside, 9500-9000 put options saw open interest additions as well. Maximum open interest for the June monthly series now stands at
10000 call option and 9000 put option.
During this week, Nifty took support near the 9000 mark and rallied higher in last couple of sessions of the May series expiry. This upmove
was due to a combination of short covering and fresh long formation. The Banking space mainly led the markets on back of short covering.
The rollover in Nifty is at 75.67% while in Bank Nifty it is at 81.13%. FII’s have squared off much of their index futures short positions during
expiry and their ‘Long Short Ratio’ is now at 60%. As per the options data, the immediate support for Nifty futures is placed around 9200.
As of now, traders are advised to use declines as buying opportunities and trade with a positive bias. It is also advisable to keep a tab on the
Nifty Put-Call Ratio which is now at 1.61. Usually PCR value around 1.80 is considered as overbought zone where traders should then prefer
to book profits on long positions.
Last but certainly not the least, since last couple of days we have been receiving many queries on why Nifty future is trading at a big
discount. In our sense, it is more to do with some of the index heavyweights going ex-dividend in June month and hence, it is already been
discounted in the index future.
Long Formation
Chg (%)
Chg (%)
MOTHERSUMI 25462000 34.64 93.60 18.18
JSWSTEEL 33697400 16.66 182.80 10.49
BRITANNIA 1685400 16.64 3363.65 6.61
BALKRISIND 1228800 15.92 1073.30 8.51
JUSTDIAL 1925000 14.01 390.15 12.24
Weekly change in OI
Short Formation
Chg (%)
TORNTPHARM 1406000 55.88 2350.30 (9.46)
BHARTIARTL 82347288 40.03 551.00 (6.98)
SUNTV 3979800 3.86 384.30 (2.31)
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For Private Circulation Only
Technical and Derivatives Review
| May 30, 2020
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst - Technical & Derivatives sameet.cha[email protected]g.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