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Technical and Derivatives Review |March 24, 2023
Lowest weekly close in seven months; Nifty below 17000
Sensex (57527) / Nifty (16945)
Source: Tradingview.com
Future outlook
We had a nervous start to the week to challenge the previous swing low of 16850. Fortunately, the buying emerged at lower levels
which was then followed by an extended rebound in next two sessions, ahead of key FED policy. On Thursday, suddenly markets
took a U-turn from the strong resistance zone of 17200 – 17250. On Friday, the sell-off aggravated post the midsession, courtesy to
news flow regarding Government’s ‘Securities Transaction Tax (STT)’ on selling of Futures and Options created some tumult towards
the fag end of the session. Adding to this, the weak start in European bourses dragged Nifty below 17000 to mark lowest weekly
close in last seven months.
There’s still no respite for the bulls as any intermediate bounce is getting sold into and prices continue to move in a lower top-lower
bottom formation. Globally, the mounting concerns over a few banks and now domestically, the hiking of STT has dampened the
market sentiment. The market is currently oversold, but such financial issues can be very disruptive at times. Hence, traders should
ideally avoid aggressive bets for a while. From a technical point of view, we are not too far from the sacrosanct support zone of
16850 - 16800, which coincides with the September month swing low and 89-weekly EMA. We continue to remain hopeful but at
the same time for momentum traders, it’s better to wait for some price confirmation once all this negativity subsides on global as
well as domestic front. On the higher side, 17200-17250 has been acting as a sturdy wall and the bulls desperately need a convincing
breakout beyond this to make a comeback. The volatility is likely to be on the higher side and the apt strategy would be to keep a
close eye on global developments and take one step at a time. In case of relief, traders can find ample opportunities in the beaten
spaces and for investors, this decline would provide opportunity to accumulate quality stocks in a staggered manner.
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Sho
rt Form
at
ion
F&O data indicates an oversold market
Nifty spot closed at 16945.05 this week, against a close of 17100 last week. The Put-Call Ratio has decreased from 0.88 to 0.78 on
Weekly basis. The annualized Cost of Carry is positive at 4.31%. The Open Interest of Nifty Futures increased by 9.95%.
Derivatives View
Nifty current month’s future closed with a premium of 10 against a premium of 78.10 points to its spot in the previous week. Next
month’s future is trading at a premium of 102.85 points.
Our market started the week on a pleasant note, but in the last two sessions, it tumbled from the critical resistance and plunged to
sneak below the psychological mark by the end. On the derivatives front, we witnessed a mixed bag of trade, starting from short
covering to long build-up, but eventually the sell-off in the last session dampened the overall sentiments, with both indices
showcasing short formation on a weekly basis. The stronger hands curtailed some of their shorts in the system, leading ‘Long Short
Ratio’ to surge a bit to 13% from 10% WoW. On the options front, the 17000 put strike holds the highest OI concentration, followed
by 16800 PE, suggesting a downward shift in the support base. On the flip side, a decent piling of OI is seen at 17000-17100 call
strikes, indicating immediate resistance in the comparable period. Data suggests our markets are extremely oversold; hence, would
advise traders to avoid undue risk.
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
METROPOLIS 1086400 30.45 1207.30 (5.31)
VOLTAS 6510000 29.63 821.45 (7.12)
LICHSGFIN 15536000 21.70 321.40 (8.12)
INDIACEM 18815200 18.89 175.65 (7.26)
HAL 3901200 18.79 2572.00 (7.83)
Weekly change in OI
Long Formation
Scrip
OI
Futures
OI
Chg (%)
Price
Price
Chg(%)
RAMCOCEM 3086350 21.93 742.10 2.83
INDIAMART 440700 21.46 4980.35 1.56
MANAPPURAM 44004000 17.03 117.65 3.98
JUBLFOOD 17940000 13.54 437.10 1.89
SRF 3479250 4.65 2379.95 2.73
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Technical and Derivatives Review |March 24, 2023
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 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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