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Technical and Derivatives Review | March 04, 2022
No respite yet, Nifty at seven-month low
Sensex (54334) / Nifty (16245)
Source: Tradingview.com
Future outlook
After previous Thursday’s brutal knock, market recovered a fair bit of ground and this week, for first three sessions, Nifty remained
in a range of 300 points with volatile swings on both sides. All this while, 16500 provided some support; but on Friday, the global
worries once again spooked market participants to not only open below this level but went on to even challenge 16200 on an
intraday basis. Although it ended the week tad above it, the Nifty confirmed a lowest close in last seven months. Friday’s correction
was no surprise to us as the consolidation in previous three sessions was clearly hinting towards the new round of selling and this is
what we witnessed throughout the day.
Now if we meticulously observe Friday’s price action, we can see moderate damage in key indices, but individual stocks were falling
like a bottomless pit. Hence although markets are oversold since last few days, there is no respite overall and of course we cannot
forget, this correction has lot to do with the geopolitical concerns with respect to Russia and Ukraine. So, till the time things do not
stabilize there, market is likely to sway on news flows. Hence one should certainly brace up for similar volatility and surprises on
either side. Although such war kind of scenarios are always tricky, we can clearly see negative trend on weekly time frame charts. In
addition, the falling slope of ‘RSI-Smoothened’ oscillator is an indication of further weakness. So, although Nifty has reached to our
initial target of 16200, we do not want to pre-empt any near term bottom here.
From an investors’ point of view this is certainly an excellent opportunity to bag quality propositions in a staggered manner; but for
traders, it would be difficult to say that worse is behind us. We do not want to sound too pessimistic but looking at the current
scenario, we will not be surprised to see Nifty entering sub-16000 terrain. In a worst-case scenario, we do not expect Nifty below
15500 – 15200 as of now. Let’s see how things pan out going ahead and obviously all eyes on global development. In case of any
positive surprise next week, we would be keeping a close eye on few scenarios. As far as levels are concerned, 16000 – 15900 is to
be seen as immediate supports; whereas on the higher side, 16450 followed by 16600 are to be considered as strong resistances.
We reiterate, the pragmatic approach would be to follow stock specific approach (identifying apt theme is the key) and should avoid
aggressive bets overnight for a while.
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Technical and Derivatives Review | March 04, 2022
16100-16200 remains the make or break zone
Nifty spot closed at 16245.35 this week, against a close of 16658.40 last week. The Put-Call Ratio has decreased from 0.91 to 0.85.
The annualized Cost of Carry is positive at 0.93%. The Open Interest of Nifty Futures increased by 22.80%.
Derivatives View
Nifty current month future closed with a premium of 13.60 points against a discount of 2.35 points to its spot. Next month future is
trading at a premium of 62.20 points.
Post last week’s massive fall, we saw index consolidating in the range of 16350-16800 except for Friday wherein index tested the
previous swing lows. However, due to some respite in the midst we managed to conclude the week above 16200. We observed
massive build-up in banking index especially; the open interest jumped up 85% in a week and in case of Nifty, open interest surged
24%. We believe majority of the positions formed in both the indices are on short side. Stronger hands continued relentless selling in
equities. Meanwhile, they exited decent shorts and added fresh longs in index futures segment; resulting ‘Long Short Ratio’ surged
to 62% from 48% Wow. In options front, we observed fresh writing in 16200-16300 puts. For the coming week, it would be
interesting to see if we manage to sustain above 16100-16200 zone. Hence, traders should keep a close tab on above mentioned
levels and continue trading in individual space.
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
ULTRACEMCO
3151500 57.87 6051.90 (7.88)
ASIANPAINT 6150600 51.22 2746.90 (12.13)
BIOCON 18715100 47.49 329.00 (16.77)
RAMCOCEM 2321350 38.77 735.05 (5.59)
DALBHARAT 757750 37.77 1406.55 (10.96)
Weekly change in OI
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
INDUSTOWER
23668400 120.13 208.70 1.68
PERSISTENT 499350 32.63 4082.25 5.39
TRENT 2960900 22.39 1095.05 2.22
INTELLECT 594750 17.48 682.65 5.53
RELIANCE 33749000 12.29 2332.75 1.93
Short Formation
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Technical and Derivatives Review | March 04, 2022
Sameet Chavan
–
Technical & Derivatives
sameet.chavan@angelone.in
Sneha Seth Derivatives Analyst sneha.seth@angelone.in
Rajesh Bhosale Technical Analyst rajesh.bhosle@angelone.in
Osho Krishan Senior Analyst – Technical & Derivatives osho.krishan@angelone.in
Research Team Tel: 022 - 39357600 (Extn – 6844) Website: www.angelone.in
For Technical Queries E-mail: technicalresearch-cso@angelone.in
For Derivative Queries E-mail: derivatives.desk@angelone.in
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