For Private Circulation Only

Technical and Derivatives Review | May 06, 2022

Stressful time continues, all eyes on global peers

Sensex (54836) / Nifty (16411)

Source: Tradingview.com

Future outlook

The May month kick-started on a weak note in-line with what SGX was indicating. However, on that day we did see some buying at

lower levels which helped erasing most of the losses to close convincingly above 17000. After a day’s break, we resumed on

Wednesday with some hesitance around 17100. Later on, a surprising Rate hike by RBI triggered massive sell off in our markets to

send Nifty below the key support zone of 16800 with some authority. On the following day, it appeared as if the selling was an

overreaction; but this time, global markets became the spoilsport. With a huge gap down on Friday, our markets started around the

16400 mark. Fortunately, due to lack of follow through selling, we did not extend the damage and closed around the opening point.

It was one of the worst weeks in last three months as Nifty shed more than 4% this week. Mostly, global factors tend to trigger such

substantial sell offs but, on this occasion, it was initiated due to domestic developments and then to rub salt in the wound, global

cues fuelled the corrective move. Honestly speaking, we did not expect the fall to extend below 16500 but when global uncertainty

comes, no level is respected. Globally, things have become extremely bleak, and it would be very difficult to assess the situation

there. Despite this, we do not want to get carried away and hence, would avoid going short aggressively. If we take a glance at the

daily time frame chart, we can see ‘Pennant’ pattern target in the vicinity of 16200 – 16000, which is not far away from current level.

Hence, we would rather wait for some reversal in coming week. On the higher side, 16500 followed by 16700 are the immediate

levels to watch out for. Let’s see how things pan out globally and be hopeful for some sustainable relief on that front.

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Technical and Derivatives Review | May 06, 2022

FIIs continued their relentless sell-off

Nifty spot closed at 16419.40 this week, against a close of 17102.55 last week. The Put-Call Ratio has decreased from 0.96 to 0.74.

The annualized Cost of Carry is positive at 0.91%. The Open Interest of Nifty Futures increased by 25.01%.

Derivatives View

Nifty current month’s future closed with a premium of 8.15 points against a premium of 32.70 points to its spot. Next month’s future

is trading at a premium of 20.80 points.

A timid start for our equity market tracking the weakness among global bourses, that further got aggravated as RBI stuns with the

surprise rate hike. The benchmark index Nifty50 plummeted over 4 percent and has been the worst week in the last three months.

The technical support was treated just as a number as the stronger hands continued their relentless selling spree. Looking at the

F&O data, we observed mixed activity, wherein the stronger hands started with adding short positions, followed by an overdue long

unwinding, and ended the week with a huge short built-up. The pile-up is visible in the 16000-16200 Put strikes in the options

segment, which is expected to act as a key support zone. While on the contrary, a considerable OI concentration is built on the

16500-16700 call stikes, breaching which some assurance could be seen in the market. Considering recent developments both on

the domestic as well as the global front, strong indecisiveness could be sensed among the market participants, and thus traders are

advised to stay cautious and avoid aggressive bets till the volatility looms over.

Scrip

Futures

Chg (%)

Price

Chg(%)

FSL 14716000 38.62 113.05 (9.99)

FEDERALBNK 80390000 38.60 91.35 (5.14)

DIXON 787875 38.28 3890.90 (9.51)

INDIAMART 382200 31.88 4183.70 (9.48)

TORNTPOWER 3859500 28.65 493.85 (7.48)

Weekly change in OI

Long Formation

Scrip

Futures

Chg (%)

Price

Chg(%)

ABB 444000 69.30 2262.25 7.84

TATACHEM 6908000 28.21 1037.30 10.16

POWERGRID 43589376 12.38 238.65 4.33

NTPC 72526800 8.64 159.75 2.01

ONGC 50554350 5.53 167.20 3.79

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Technical and Derivatives Review | May 06, 2022

Sameet Chavan

Chief Analyst

–

Technical & Derivatives

sameet.chavan@angelone.in

Sneha Seth Senior Analyst – Technical & Derivatives 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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