For Private Circulation Only
Technical and Derivatives Review
|July 31, 2020
Nifty snaps six-week winning streak, still 11000 defended successfully
Sensex (37607) / Nifty (11073)
Source: Trading View
Future outlook
This week, the market started the proceedings on a sluggish note in the absence of any trigger on the domestic as well as global
front. On the following day, we witnessed a good broad-based rally to mark fresh 4-months high beyond the 11300 mark. However,
the way things looked at the end of Tuesday’s session, it just turned out to be an illusion in the remaining part of the week. Although
there were a couple of attempts made around 11300, the market was unable to display the strength in a similar fashion. As a result,
we witnessed some profit taking in the latter part of the week to conclude around the lower end of the weekly range.
Market finally snapped its six-week winning streak due to some weakness around 11300. However, the damage is not big and hence,
as of now should only be interpreted as a profit booking after a relentless rally. Towards the end of the week, we were seeing 11050
as a key support; but the way markets behaved on Friday around it, this does not appear to be an important support. Hence, we
would rather extend the range slightly on downside and would observe key supports around 10950-10870 for the forthcoming
week. In case if profit booking extends towards these mentioned levels, it should still be considered as a corrective move and not
the actual trend reversal. In our sense, the actual weakness would start only if Nifty sustains below 10870 and hence, till then one
should continue with a stock specific positive bias. However, on the flipside, 11300-11350 has also become a strong ceiling and the
fresh leg of the rally would only unfold above this. Till then traders are advised to remain light within a slightly bigger range of 10870
– 11350.
For the early part of the week, 11200-11250 should be considered as an immediate resistance zone. The banking space has been the
weakest link and the way it’s placed, the directional move in benchmark would mainly be triggered by the banking stocks only.
Hence, all eyes would be on it. Apart from this, the entire Pharma space has been once again on a roll after a brief pause and there
were some other sectoral movers also, that kept buzzing and bucking the trend. So, the pragmatic approach would be to focus on
individual stocks till the time market remains in the above-mentioned range.
For Private Circulation Only
Technical and Derivatives Review
|July 31, 2020
FII’s carry long positions in new series
Nifty spot closed at 11073.45 this week, against a close of 11194.15 last week. The Put-Call Ratio has decreased from 1.74 to 1.31.
The annualized Cost of Carry is positive at 2.73%. The Open Interest of Nifty Futures has decreased by 17.62%.
Derivatives View
Nifty current month future closed with a premium of 22.40 points against a discount of 15.95 points to its spot. Next month future is
trading at a premium of 26.40 points.
As far as Nifty options activities are concerned, the weekly expiry options witnessed open interest addition in 11200, 11300 and
11500 call options whereas put options of 11000 and below strikes too added some open interest at the start of the new series.
Maximum open interest for the coming weekly series is at 11500 call and 11000 put options.
During the week, Nifty surpassed the 11300 mark, however it failed to sustain above that and witnessed some correction around
expiry to end the week with a loss of over a percent. The rollover in Nifty is at 77.59 percent, which is in line with its 3-month
average of 77.40 percent, whereas rollover in Bank Nifty is at 75.30 percent v/s its average of 79 percent. FII’s have carried more of
their long positions to the new series and their ‘Long Short’ Ratio in index futures segment is tad over 66 percent. The weekly
options data indicates support around 11000 mark and resistance at 11200-11300. If we look at the sector specific build up, it is
seen that the stocks from the Cement and the Pharma sector have added good amount of long positions which have
been rolled too. So, traders should look for stocks from these sectors for short term trading opportunities.
Weekly change in OI
Short Formation
Chg (%)
UBL 1247400 25.05 953.50 (4.67)
Long Formation
Chg (%)
CIPLA 14478100 17.19 723.70 8.75
For Private Circulation Only
Technical and Derivatives Review
|July 31, 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