Quantitative data set up: Long Short Ratio falls to seven-month low; 14,750 crucial for Nifty next week


Greed and Fear Indicator: Cool down in VIX is required to sustain the bullish grip (VIX CMP – 20.26)

India VIX was down by 2.69 percent from 20.82 to 20.26 levels on a week-on-week basis. VIX needs to cool down to 20 mark to again attract a bullish stance.

CBOE VIX: CBOE VIX was up by 12.70 percent from 16.69 to 18.81 levels. The week saw quite a roller coaster ride and volatility touched a high of 28.93 levels.

Fund Flow: FIIs reduce positions and Long Short Ratio falls to seven-month low levels

During the week, FIIs turned net sellers for the most part of the truncated week and sold Rs 3,620 crore worth shares while DIIs were net sellers worth Rs 1,244 crore in the week. The Long Short Ratio dropped to lowest since October 30 and ranged from 41.16 percent to 51.27 percent in the week and concluded the week at 41.64 percent. On the FII derivatives front, there was a short built up in index futures and stock futures.

Safe Haven: Gold glittered and edged higher on account of Akshaya Tritiya (Gold, MCX CMP – Rs 47,697 per 10 grams)

Gold was slightly down by 0.05 percent on the weekly scale and while it traded downwards since the beginning of the week, Friday negated its lower highs formation on a daily scale and bounced on account of Akshaya Tritiya. The weakening dollar also acted as a catalyst for the yellow metal to shine and investors weighed signs of inflationary pressures. However, it needs to surpass Rs 48,000 for continued momentum while 46,900 acts as immediate support.

Among other precious metals, silver was marginally down by 0.46 percent this week.

Option Data: Nifty wider trading range between 14,400 and 15,000 (Nifty CMP – 14,677, Bank Nifty CMP – 32,169)

Nifty futures closed the week with losses of 1.04 percent with addition in futures Open Interest (OI) by 0.76 percent on a weekly basis which indicates shorts are being built in the index. During the week, Put Call Ratio (PCR) based on Open Interest of Nifty moved in between 1.11 and 1.33 levels and closed the week at its lower band.

On the option front, maximum Put open interest is at 14,000 followed by 13,500 strike while maximum Call open interest is at 15,000 followed by 14,800 strike. Call writing is at 15,100 and 15,300 strike while Put writing is at 14,650 then 14,500 strike. Option data suggests a wider trading range in between 14,400 and 15,000 zones.

Bank Nifty futures closed the week with losses of 2.34 percent with addition in Open interest by 6.69 percent on a weekly basis which suggests shorts are being built in the banking index and it continues to underperform the broader market. Put Call Ratio based on Open Interest of Bank Nifty remained in between 0.71 and 0.93 and it closed at its lower levels. IV of Banking index decreased to 27.6 levels as the week concluded. For weekly Bank Nifty, maximum Put open interest is at 31,000, while maximum Call open interest is at 32,500. We have seen Call writing in 32,500 while Put writing is witnessed at 31,000.

The Nifty Financial Services index reflected reduction in open interest by 2.62 percent with a decrease in futures price by 2.31 percent in the week.

India Rupee: Dollar skewed downwards at the fag end of the week (USD/INR CMP – 73.29)

The USD/INR pair was marginally up by 0.05 percent from 73.25 to 73.29 on a week-on-week basis. The pair has been making lower highs lower lows from the last three weeks. It negated its higher lows formation of the last four sessions and faced resistance around its 200 DMA. With the pandemic meltdown and fluctuating US Treasury yields, the dollar may surprise us.

Crude Oil: Oil moves in a range over concerns of partial lockdown (Crude Oil WTI, MCX CMP – Rs 4,786 per barrel)

Oil was slightly up by 0.48 percent on a week-on-week basis and saw a quite volatile week. It is taking support at its 50 DMA earlier but concerns over fast-spreading coronavirus and partial lockdown imposed in many states shake confidence in oil.

Dow Jones Industrial Average: US Indices witnessed big swings in the week (DJIA CMP – 34,382)

The Dow Jones was down by 1.14 percent on a week-on-week basis. While the first half of the week saw lower lows, the latter part covered most of its losses and the index bounced above 34,000 zone. Earlier this week, the index touched 35,091 levels and is looking forward to the next sustained impulse to the upside.

Moving forward, now till Nifty has to cross and hold above 14,750 zone to witness stability and an upmove towards 14,900 then 15,000 while on the downside support is seen at 14,600 and 14,500 zones. Bank Nifty has to cross and hold above 32,500 to witness an upmove towards 33,000 and 33,333 while on the downside support is seen at 32,000 and 31,750 levels.

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