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For Private Circulation Only
Technical and Derivatives Review | October 23, 2021
Banking continues to impress; but some distortion in midcap index
Sensex (60822) / Nifty (18115)
Source: Tradingview.com
Future outlook
The week started with a decent bump up which was then followed by yet another gap up on Tuesday to reach new millstone of
18600. However, the high beta midcap counters (recent movers) started correcting fiercely, which dampened the overall sentiments
in the market. Nifty had a rub off effect of this and in the process; it came off slightly in the following couple of sessions as well.
Thursday morning, the global markets were a bit stable and as a result, our markets opened with a decent upside gap, exceeded the
SGX Nifty by a fair margin. However it was merely a formality as we not only saw Nifty erasing all gains but also went on to slide
below 18100 during the penultimate hour. Fortunately due to late recovery in some of the heavyweights, Nifty managed to recover
fair bit of ground to conclude the weekly expiry tad below the 18200 mark. The similar price action was seen on Friday too and with
a gradual decline, Nifty ended around 18100.
Clearly, the Nifty constituents other than financial stocks are weak and they are leading the correction in the index. However, the
banking stocks seem to have different plans. They refused to correct in the first half of the week and in fact, when Nifty was about to
knock the crucial support of 18000 in the latter half, the banking counters came for a rescue. There was complete gush seen in the
banking space on Thursday, which led BANKNIFTY to close above the new millstone of 40000 with some authority. If banks had not
shown this mesmerising move towards the end of the week, the Nifty would have certainly breached the 18000 mark. Now two
major indices are showing complete divergence, so going forward it would be interesting to see whether the BANKNIFTY’s strength
lifts Nifty higher or vice versa. Hence, all eyes on the banking space going forward; because a follow up move from hereon will
certainly lift the overall sentiments in the market.
As far as levels are concerned, 18060 18000 are to be considered as crucial supports; whereas on the flipside, 18260 18400
would be seen as immediate hurdles. Since the weekly chart of midcap index is showing a bearish formation, which can be termed
as Engulfing’ candle; we advise traders not to create aggressive longs in high beta counters. Yes the thematic approach can still be
followed, but one needs to be very selective now. Below 18000 for Nifty, the near term uptrend gets negated and then we are up for
some correction which is overdue since a long time.
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For Private Circulation Only
Technical and Derivatives Review | October 23, 2021
PCR-OI hints market is oversold
Nifty spot closed at 18114.90 this week, against a close of 18338.55 last week. The Put-Call Ratio has decreased from 1.44 to 0.82.
The annualized Cost of Carry is positive at 9.96%. The Open Interest of Nifty Futures decreased by 6.92%.
Derivatives View
Nifty current month future closed with a premium of 29.65 points against a premium of 18.20 points to its spot. Next month future
is trading at a premium of 74.20 points.
The week was full of action, we saw index testing the yet another milestone of 18600 but could hardly sustain as we saw sharp
selling thereafter to drag index below 18050. In F&O space, we hardly saw any relevant open interest activity despite such volatility.
In options front, massive writing was seen in 18200-18500 call strikes; resulting maximum open interest concentration shifting lower
to 18200 now. On the flip side, 18000 put holds highest positions and we also saw fresh addition on Friday. PCR-OI plunged below 1,
which clearly hints market is oversold now. The banking index has been outperforming lately which is certainly not letting the Nifty
fall below the psychological mark of 18000. Going ahead, we would wait and watch for relevant build-up before forming any
directional bets.
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
IEX 17977500 59.16 765.35 (3.92)
VOLTAS 3024000 45.91 1175.25 (11.19)
HINDUNILVR 9237000 33.89 2448.00 (7.51)
LALPATHLAB 1155000 28.48 3389.75 (7.24)
GAIL 59889800 27.91 150.65 (6.31)
Weekly change in OI
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
FEDERALBNK 117650000 26.23 104.30 11.73
METROPOLIS 923800 25.41 2806.90 5.94
MANAPPURAM 24132000 23.03 200.30 2.17
PAGEIND 107250 11.61 37908.85 1.06
RBLBANK 31992800 8.75 201.50 4.98
Short Formation
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For Private Circulation Only
Technical and Derivatives Review | October 23, 2021
Research Team Tel: 022 - 39357600 (Extn 6844) Website: www.angelone.in
For Technical Queries E-mail: technicalresearch-cso@angelbroking.com
For Derivative Queries E-mail: derivatives.desk@angelbroking.com
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Technical and Derivatives Team:
Sameet Chavan Chief Analyst – Technical & Derivatives sameet.chavan@angelone.in
Rajesh Bhosale Technical Analyst rajesh.bhosle@angelone.in
Sneha Seth Derivatives Analyst sneha.seth@angelone.in