Technicals Analysis

WHAT LIES AHEAD : NEAR-TERM PICTURE

SPOT NIFTY : What a year it has been for Nifty! It touched the milestone of 12,400 levels at the beginning of the year and within no time, slid down to the levels of 7,500 in March. Thereafter, it witnessed a V-shaped recovery and went onto touch an import-ant psychological level of 14,000 on the final trading session of the year.

It was not only the last trading session of 2020 but also, the last trading session of December series expiry. Unlike usual expiry, Nifty oscillated in a narrow range of 88 points and closed almost unchanged. Despite not registering significant gains on the final trading session of the year, Nifty gained nearly 15 per cent of the calendar year 2020. This was mainly due to a stellar run seen in the last two months of the year as in November, Nifty jumped 11.39 per cent while in December, it rose 7.81 per cent. Amongst the sector, Nifty Pharma and Nifty IT were the two showstoppers for CY 2020 as they soared 60.64 per cent and 54.93 per cent, respectively.

December expiry rollover for Nifty stood at 68.9 per cent and for Bank Nifty, it stood at 71.27 per cent. As Nifty continues to ascend, the daily range of Nifty continued to shrink and formed an indecisive candle for the third straight day. This indicates that the bulls are tak-ing a bit of a breather after a strong run. The trend of Nifty remained bullish as it continued trading above the important short-medium and long-term moving averages.

Going ahead, the level of 14,000 would act as an immediate resistance as this is a round number and any sustainable move above the 14,000 mark, could lead to the 14,200 mark. On the downside, Monday’s gap area (13,771-13,811) is likely to act as an immediate support level as it coincides with the previous all-time high of Nifty.

Interestingly, on the hourly chart, the RSI has not moved below the 60-mark, which led to the formation of a super bullish range and in this phase, the RSI tends to oscillate between the zones of 60 and 80. Bollinger band is seen narrowing and the price is not slipping below the 20-hourly moving average, which indicates that the bulls are in the driver’s seat, and at this moment, they are taking a breather. And soon, on closing above the level of 14,000, it would result in a fresh breakout and the target of 14,200 would be on cards.

Our advice for traders would be to stay with the trend as long as Nifty does not close below its prior bar low and 5-EMA. Also, avoid contra trades.

NIFTY DERIVATIVES:
Nifty Futures has gained 959.45 points or 7.36 per cent in the December monthly series. For the next weekly expiry, the open interest wise put-call ratio (PCR) is at 1.04. For January monthly series, PCR is at 1.53.

For the next weekly expiry, the highest call open interest is at 14,000 strikes with 20,60,250 OI, followed by 14,200 strikes with 14,17,500 OI. On the put side, 13,900 strikes have 14,60,700 open interest, which is the highest. Today, the highest addition in the open interest was seen at 14,000 calls of the next weekly expiry with 10,59,825 OI and on the put side, 14,000 puts have seen the highest addition in the open interest with 8,50,800 OI. For the next weekly expiry, the total call open interest is 1,56,12,975 and the put open interest is 1,62,45,450.

For January monthly series, the highest call open interest is at 14,000 strikes with 18,54,675 OI, followed by 15,000 strikes with 10,75,875 OI. On the put side, the highest put open interest is at 13,000 strikes with 23,94,675 OI. The current derivative data suggest that the Max Pain is at 13,900 for the monthly expiry.