Technical and Derivatives Weekly Review - January 27, 2023

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Technical and Derivatives Review |January 27, 2023

Adani group fiasco plays a spoilsport, drags Nifty at 17600

Sensex (59331) / Nifty (17604)

Source: Tradingview.com

Future outlook

For the fourth consecutive week, we had a promising start on Monday, and it appeared as if we are going to finally come out of the

recent congestion zone in the upward direction. Unfortunately, mostly market tries to deceive us and this time too, it caught most of

the traders on the wrong foot. On Wednesday, some unpleasant news related to Adani group triggered the selloff in the banking

counters, which augmented on Friday as well. In fact, the entire Adani conglomerate just plummeted like a bottomless pit. In this

process, we not only thrashed 17750 but also went on to hasten towards the 17500 mark. Eventually, with some modest recovery in

the end, the Nifty concluded the dreadful week at 17600 by shedding over a couple of percent on a week-on-week basis.

In the coming week, the Finance Minister is going to present the Union budget and mostly, market prepares itself for this mega

event. This time, the fiasco in last two days has dampened the overall sentiments and certainly disrupted prices across the board.

From an optimist point of view, it’s good that the market is approaching this event on a lightener note and any favorable outcome,

would lift the markets higher. On the other hand, a slight disappointment would lead to further aberration in the market. Let’s see

how things pan out going ahead. Looking at the daily chart, we can see prices gyrating in a ‘Falling Wedge’ pattern and have

managed to retrace back to the lower end at the close. Considering the ‘Positive Divergence’ in ‘RSI-Smoothened’ oscillator, we may

expect some recovery from lower levels.

As far as levels are concerned, 17500 is to be treated as immediate support and a slide below this would extend the correction

towards the ‘200-day SMA’ level of 17300 – 17200. If this happens then investors / traders are advised to start nibbling into quality

propositions. On the flipside, 17700 – 17800 are to be seen as strong hurdles. If market has to regain strength as well as confidence,

Nifty needs to surpass 18000 on a closing basis. Traders are advised to keep a note of all the above scenarios and should ideally

remain light ahead of the event.

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Technical and Derivatives Review |January 27, 2023

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Long Short Ratio plunged to 25%

Nifty spot closed at 17604.35 this week, against a close of 18027.65 last week. The Put-Call Ratio has decreased from 0.83 to 0.74 on

Weekly basis. The annualized Cost of Carry is positive at 6.63%. The Open Interest of Nifty Futures decreased by 14.47%.

Derivatives View

Nifty current month’s future closed with a premium of 82.80 against a premium of 103.95 points to its spot in the previous week.

Next month’s future is trading at a premium of 174.15 points.

The Indian equity market has tumbled in the last two trading sessions amid the unpleasant news related to the Adani group, which

dampened the overall sentiments and resulted in carnage for the key indices. In the F&O segment, we have witnessed a strong short

build-up in both indices ahead of the Budget week. The stronger hands have covered their longs and added fresh shorts in the

system, resulting in a massive contraction in the ‘Long Short ratio’ which plunged to 25% from 53% on a weekly basis. Also, due to

the massive sell-off in the last two sessions, the PCR-OI declined to 0.74. On the options front, a decent piling up of OI is seen at the

17500 put strike, indicating nearby support for the index. While on the higher end, 17800-17900 call strikes have decent piled-up

positions, followed by the maximum OI concentration at 18000 CE, which is to be seen as the major hurdle. Amidst the volatility, it is

advisable to stay light and avoid aggressive bets for the time being.

Scrip

Futures

Chg (%)

Price

Chg(%)

INDUSTOWER 27510000 28.99 137.85 (19.48)

DIXON 894000 22.01 2684.60 (23.71)

AMBUJACEM 100240200 19.96 383.60 (25.97)

SHREECEM 307900 8.65 21665.95 (10.91)

ADANIPORTS 71167500 7.64 602.70 (22.26)

Weekly change in OI

Long Formation

Scrip

Futures

Chg (%)

Price

Chg(%)

BAJAJ-AUTO 1784250 38.18 3965.50 10.83

BRITANNIA 1439000 21.11 4411.45 1.99

PERSISTENT 718550 4.05 4583.00 7.48

ASHOKLEY 80485000 2.24 150.45 4.41

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Technical and Derivatives Review |January 27, 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

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For Derivative Queries E-mail: derivatives.desk@angelone.in

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Technical and Derivatives Review |January 27, 2023

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