Last Updated : Nov 22, 2020 09:54 AM IST | Source: Moneycontrol.com

Quantitative data set up: 12,750 to play a crucial role in Nifty's march towards 13,000 mark

Nifty futures closed the week with gains of 0.92 percent with addition in futures Open Interest by 3.04 percent on a weekly basis which indicates longs are being built up as the index is heading towards its lifetime high territory.

Chandan Taparia

India VIX was down by 0.93 percent from 19.70 to 19.61 levels during the week. Volatility has cooled down but needs to continue at lower zones to ride the momentum with higher market base.

CBOE VIX: CBOE VIX was up by 2.60 percent from 23.1 to 23.7 levels. Volatility has significantly cooled down from higher levels but needs to cool further for bulls' grip in the market.

Fund Flow: Friends from across the border have been buying relentlessly

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In the cash segment, FIIs were net buyers worth Rs 13,019 crore throughout the week. DIIs on the other hand were net sellers to the tune of Rs 12,343 crore in the week. The Long Short Ratio ranged from 68.04 percent to 71.32 percent in the week to close the week at 69.94 percent. On the FIIs derivatives front, there was long built up in index futures and short built up in stock futures.

Safe Haven: Gold losing lustre with progress in the Coronavirus vaccine and strength in the Global indices (Gold, MCX CMP – Rs 50,310 per 10 grams)

Gold was down by 1.21 percent on the weekly scale and slipped lower than its 50 DMA on daily scale. Progress in the vaccine for the Coronavirus weakened the yellow metal. Gold is expected to remain choppy but only in the short term as concerns could rise amid a surge in the number of coronavirus cases and derail expected US stimulus. Prices need to hold above Rs 49,200 levels while immediate resistance is seen at Rs 51,300 levels.

Among other precious metals, silver declined by 2.4 percent this week.

Option Data: Nifty's wider trading range between 12,500 to 13,000 (Nifty CMP – 12,859, Bank Nifty CMP – 29,236)

Nifty futures closed the week with gains of 0.92 percent with addition in futures Open Interest (OI) by 3.04 percent on a weekly basis which indicates longs are being built up as the index is heading towards its lifetime high territory. During the week, Put Call Ratio (PCR) based on Open Interest of Nifty moved in between 1.47 to 1.67 levels and closed the week at 1.57 levels.

On option front, Maximum Put open interest is at 12,000 followed by 12,500 strike while maximum Call open interest is at 13,000 followed by 13,500 strike. We have seen marginal Call writing in 13,200 and 12,800 strike while Put writing is at 12,800 then 12,500 strike. Option data suggests a wider trading range in between 12,500 to 13,000 levels.

Bank Nifty futures closed the week with gains of 2.57 percent with reduction in Open interest by 10.55 percent on a weekly basis which suggests shorts are being covered in the banking index. Put Call Ratio based on Open Interest of Bank Nifty remained in between 1.06 to 1.42 and it closed the week at 1.18. IV of Banking index decreased to 31.2 levels as the week concluded. Maximum Put open interest is at 28,000 followed by 27,000, while maximum Call open interest is at 29,500 followed by 30,000. We have seen Call writing in 29,500 while Put writing is witnessed at 28,000 strike.

India Rupee: Rupee gains strength with fund inflows and positive momentum in the Indian Equity market (USD/INR CMP – 74.118)

The USD/INR pair was down by 0.60 percent and descended during the week as Rupee gained strength with a rally in the Nifty index moving towards its life time high territory and continuous foreign fund inflows. The greenback witnessed a setback as the number of coronavirus cases surged in the US. The pair has been making lower tops - lower bottoms and wiped off entire gains of the previous week.

Crude Oil: Oil spilling mixed signals (Crude Oil WTI, MCX CMP – Rs 3,120 per barrel)

Oil was up by 3.56 percent on a week-on-week basis. Prices are trading quite volatile and suggested mixed signals. Asian refineries are racing to produce and demand is comparatively better than compared to the United States or Europe.

DJIA: US Indices dip over shutdown worries (DJIA CMP – 29,263)

The Dow Jones was down by 0.73 percent on a week-on-week basis. The index slipped on Friday amidst a slowdown in the expected economic recovery due to a rise in the number of cases across. Rise in jobless claims and the next wave of the coronavirus concerned investors. It made a bearish candle on weekly scale after a gap up and a Doji formation in the previous week.

Moving forward, Nifty has to continue to hold above 12,750 zone to witness an up move towards 13,000 zone while minor support is seen at 12,600. Bank Nifty needs to hold above 29,000 to witness an up move towards 29,500 then 29,800 level while on the downside support is seen at 28,750 then 28,500.

(Chandan Taparia, Vice President – Research Derivatives & Technical Analyst at Motilal Oswal.)

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First Published on Nov 22, 2020 09:54 am
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