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For Private Circulation Only
Technical and Derivatives Review | October 29, 2021
The mesmerizing rally finally takes some breather
Sensex (59307) / Nifty (17672)
Source: Tradingview.com
Future outlook
The global set up was just ideal for our markets to have a head-start on Monday and in fact we over surpassed what SGX Nifty was
indicating as well. However, markets did not sustain at higher levels and had a slight weak close. This was followed by some recovery
in the following two sessions; but overall the momentum was clearly lacking. The expiry session of the October series turned out to
be a nightmare for the bulls as we witnessed a massive sell off across the board throughout the session to break all important levels
one after another. Nifty eventually plunged below 17900 to conclude the October expiry on a depressive note. In this process, Nifty
ended with nearly 2% loss, thereby marking a biggest single day cut after April 12, 2021. The bears were not done with this as we
witnessed a follow through selling of this to test the 17600 mark.
Due to this week’s correction, the bears have finally managed to apply brakes on the ongoing euphoria. We can see weakest weekly
performance after nearly 8 months as Nifty shed more than 2% to conclude the October month convincingly below 17700. Since last
week or so, Nifty started to look a bit nervous but banking was providing a strong helping hand and hence we did not see any major
damage in benchmark. But now, the financial space finally succumbed to the broader market weakness by tumbling over 3%. This
imposed tremendous pressure on Nifty and in the process, Nifty had to finally surrender the sheet anchor support of 18000. In fact,
due to aggrandized selling, it just hastened towards the next key support of 17600. Since last few days, we have been maintaining
our cautious stance on the market and even though market was making new highs, we maintained our scepticism and repeatedly
advised booking profits. When market was not correcting, this might have sounded senseless, but historically its proven, when
things look hunky-dory all around, the euphoric situation takes place and that is the time when market strikes back. This is exactly
what we witnessed in last couple of weeks.
Technically speaking, due to this late dominance from bears, we can observe few important developments on charts. Firstly, the
‘Lower Top Lower Bottom’ on daily chart after breaking below 18000, which coincided with the violation of the key short term
moving average of ’20-day EMA’. More importantly, if we take a glance at the monthly chart, we can see a formation of ‘Shooting
Star’ pattern, which certainly does not bode well for the bulls. Going ahead, since the market is a bit oversold, we may see some
relief move in between; but traders should not get carried away by such rebounds. On the higher side, 18000 – 18100 would now be
seen as immediate hurdles and any bounce back towards it, should be used to lighten up longs. On the flipside, we may see this
corrective move extending towards 17450 first and if things worsened then the possibility of sliding towards 17200 17000 cannot
be ruled out. We reiterate on staying light and avoiding any kind of bottom fishing for a while.
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For Private Circulation Only
Technical and Derivatives Review | October 29, 2021
18000 becomes a sturdy wall now
Nifty spot closed at 17671.65 this week, against a close of 18114.90 last week. The Put-Call Ratio has decreased from 0.82 to 0.75.
The annualized Cost of Carry is positive at 3.34%. The Open Interest of Nifty Futures decreased by 9.59%.
Derivatives View
Nifty current month future closed with a premium of 43.65 points against a premium of 74.20 points to its spot. Next month future
is trading at a premium of 116.50 points.
We had a positive start for the week; however, due to lack of buying index we saw index sliding below the psychological mark of
18000. However, we saw an attempt of recovery to reclaim 18350 but this got sold into on the monthly expiry day to breach support
one after the other. In fact, we saw follow-up selling to test 17600 on Friday. Meanwhile, we saw some long unwinding and short
formation last week and considering the rollovers, we believe few of these shorts have been rolled-over too. Stronger hands also
preferred staying light in index futures and rolled-over shorts in stock futures segment. In equities, they were net sellers to the tune
of Rs. 20,429 crores till date. As far as option activity is concerned, traders are now eyeing 17500 put and 18000 call options.
Considering the above data points, we would maintain our cautious stance on market and would advise traders utilizing any bounce
back in the vicinity of 18000 to add fresh shorts.
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
BANDHANBNK 31759200 34.11 292.20 (9.76)
AXISBANK 45745200 32.25 746.00 (8.99)
ADANIENT 27421000 7.53 1427.00 (7.52)
IPCALAB 1421100 20.19 2107.95 (7.16)
NATIONALUM 92301500 7.03 97.05 (6.41)
Weekly change in OI
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
MCDOWELL-N 17812500 5.65 951.40 14.01
RAMCOCEM 2742950 13.15 1070.35 10.77
ESCORTS 8461750 8.39 1577.95 7.75
UPL 26921700 1.89 741.40 5.25
BEL 25266200 3.76 207.95 3.05
Short Formation
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For Private Circulation Only
Technical and Derivatives Review | October 29, 2021
Research Team Tel: 022 - 39357600 (Extn6844) Website: www.angelone.in
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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