Pre Market Analysis

01 July 2020

Analysis of Previous Day Intraday Chart (3 min Time Frame)

1. Bank Nifty opened with a GAP up of almost 250 points following DOW. The first resistance
offered at 21500 on account of heavy CALL writing at that levels was well respected and it got
stiff resistance there.

2. 10.18 was the first action time when the sellers tried to dominate. They brought the price
slowly downwards and then broke the opening low. This must have triggered the stop losses
of many Long players as we saw a very sharp spike in price downwards. This was followed by
heavy duty OI addition suggesting people are betting big at lower prices.

3. Having broken the opening low the next target was Yesterday Close and expected move was
around 12.30 with opening of European markets.

4. In the meantime price just moved to VWAP to bounce down providing scalping
opportunities.

5. Around 12.15 the movement began. We witnessed a slight up move with ascending volume
but super trend acted a resistance and then attempt was made to break the previous day low
but was not successful.

6. There were repeated attempts at breaking this level and price took support at ST suggesting
some big move.

7. The big move happened around 2.15 PM again with DOW in red zone. It triggered huge SL’s
as seen in high red candles and we saw sharp drop in OI as well.

8. We may call it a perfect set up for the bears. They dropped the price. Weekly low 20900 well
respected.Now some intraday bears had perfect opportunity to book their profits and they did
it and price climbed back towards VWAP and Yesterday Close.

All this is suggesting that we are back to previous day level.

Open interest overall has increased. Both bulls and bears have increased their stakes.

Bank Nifty is in a zone of consolidation at this juncture as we can see at this 30 min chart. This
can be thought to be short term distribution phase before next trend move.

21691

20900
Analysis of Daily Chart(Future)

So we may see a new Trend line being respected along with 20 day moving average.

At this juncture I see following supports

a. 20900 Previous week low

b. 20152 30 day Moving average

c. 19500 (Previous to previous week low)

Important resistance Levels

a. 21553: Yesterday High

b. 21700: Friday High

c. 22500 Previous week high

Analysis of Weekly Chart(SPOT)

The price is taking resistance at 20 day moving average so it has to break this to continue
uptrend.

It clearly shows that

a. Critical Resistance at 22500 for an uptrend to continue.

b. Critical Support at 20900 to break the ongoing uptrend.

Analysis of Spot and Future

PRICE LEVELS BANK NIFTY SPOT

BANK NIFTY SPOT
BANK NIFTY FUTURE
Yesterday Today NEAR MONTH(JULY)

OPEN 21291 21524 21443

HIGH 21440 21650 21553

LOW 21026 21212 21036

CLOSE 21359 21370 21213

LAST PRICE 21370 21396 21245

Open Interest Last 30 NA NA DECREASE

min’s

Overall OI INCREASE

1. The most important thing to take note is the discount between spot and future. It is about 120
points.

2. This huge discount is not only for current month but also for next and far month also.

So what does this huge discount signify?

On one hand it shows bearishness but on the other it is also an arbitrage opportunity also. If price
moves up this discount wold be a great opportunity to grab.

Options Open Interest Spurt Analysis

Quadrant 1: 50% Rise in OI & 50% Rise in LTP

Strike % Change in OI % Change in LTP

NA

Quadrant 2: 50% Rise in OI & 50% FALL in LTP

Strike % Change in OI % Change in LTP

NA

Quadrant 3: 50% FALL in OI & 50% Rise in LTP

 Strike % Change in OI % Change in LTP

NA

This clearly shows indecision. Yesterday neither buyers nor sellers are confident of the direction
at this juncture. This is evident as we had a GAP up day but dominated by sellers who too
covered their positions at end of day.

Highest Change in Open Interest Analysis CALL side

Strike Change in OI Yesterday VWAP Closing Price

21500 CE 89320 338 293

21600 CE 100920 299 258

22300 CE 82220 96 79

Highest Change in Open Interest Analysis PUT side

Strike Change in OI Yesterday VWAP Closing Price

21300 PE 146180 343 353

21000 PE 31500 223 225

20500 PE 61400 100 95

So we see that there has been similar change in OI on both sides but the quantity is not
impressive to conclude anything. Call writers are at a loss at end of day if we compare VWAP and
closing price.

So this is indecision but slightly biased towards CALL writers so they won’t like the market
to rise.

STRIKES WITH HIGHEST OI TODAY

STRIKE OI CHANGE IN OI YESTERDAY VWAP CLOSING PRICE

44240 161 136
22000 CE 735000
188960 100 95
20500 PE 575600

STRIKES WITH HIGHEST OI YESTERDAY

STRIKE OI CHANGE IN OI YESTERDAY VWAP CLOSING PRICE
90200 31 27.5
23000 CE 709660
188960 224 139
20500 PE 514200
JUST NOTICE CALL SIDE.

Yesterday 23000CE had highest OI and today it is 22000 CE. Infact 23000 has seen some
unwinding by some writers. May be it is profit booking or fear of further rise.

Similarly 19500 PE which had highest OI addition yesterday has seen significant unwinding. Infact
highest covered positions for the day in the entire OI chain. This shows profit booking or a fear of
further fall.

If we see ITM call options there is significant unwinding of positions by writers. This may be loss
booking on account of rise in market since the day before and fear of further rise

This is not a clear clear sign but I just think that OTM writers majorly Put writers booked their
profits and ITM call writers booked their losses. This can mean that they expect some
consolidation or are mentally ready to dance to external factors for the movement.

OVERALL CALLS AND PUTS

CALLS PUTS PCR

TODAY 6285560 4359620 0.693592933644735

YESTERDAY 5521620 4357240 0.789123481876696

So overall it is a mixed statement that OI data is making. But only clear thing that is evident is that
there is more call writing than put. This just indicates that writers don’t want the market to rise.

CALL/PUT unwinding suggests some profit and loss booking and points to consolidation

So based on OI data we can say that market is going to find some

So overall OI data just points that price will find some resistance in zone of 21500-700 and some
support at 21000.

Though it is clear that resistance is stronger than support. So market may consolidate with
negative bias but subject to external conditions like DOW.

Client Wise Open Interest Analysis

This data is really interesting. We shall look at FII’s first.

• They are still net short in Futures net long in Put with significant quantity as compared to net
long in Call options. So it can be interpreted as bearish with some hedging with call
options.This hold for monthly analysis of Index Future.

• Now on intraday basis we see that Yesterday FII’s built up long positions in Index Futre and
covered their short positions.

• In options FII’s built up significantly in Long Put positions and some Long positions in Call
options too.

So I would say it is contrasting data. Overall they are bearish but yesterday they had a bullish
outlook in Futures and bearish outlook in options.

May be the strength of numbers can justify something but I’m inexperienced to comment
on this aspect.

IN cash markets too they sold worth 2000 crores yesterday but it was supported by DII’s. So with
this data I can say that they are bearish but not strongly.

World Markets
This will determine the course of Indian markets today I believe.

DOW Jones Spot

Tuesday Trading: DOW continued it’s up move on sentiment and climbed 217 points or 0.85%. It
gained majorly towards end of trading session in last one hour.

DOW Jones FUTURE

AT 7.50 AM DOW Future is trading at gain of -81 points building since Yesterday close. It might
consolidate after two days of uptrend.

ASIAN Markets
1. NIKKEI: -70 (-0.3)

2. HANGSANG: -156 (-0.64%)

SGX Nifty: -48(-0.47%

Summary
So overall

1. On basis of Intraday/Daily/Weekly Charts- Bank Nifty has been trading in a range since last
4 days now. The immediate support and resistance have to be broken for any trend to emerge.

The immediate Support levels are

a. 20900 Previous week low /which has been tested many times now (Immediate Support)

b. 20151 30 day Moving average (Next Support)

c. 19500 (Previous to previous week low) (Next important support)

Important resistance Levels

a. 21555: Yesterday High

b. 21700: Friday High (Very important for Uptrend to continue)

c. 22500 Previous week high (Next important Resistance)

2. Open interest is a mixed one and shows some consolidation with negative bias as there is
more Call writing. Also some loss/profit booking has also taken place. Option writers would offer
resistance in 21500-700 zone and offer support around 21000 levels.
So these levels are in consonance with price levels. So would be very important.

3. Difference between Spot and Future: Huge discount may be a sign of bearishness or an
arbitrage opportunity.

4. FII data: They are overall bearish but seeing yesterday data this bearishness is not strong as
they had a mixed outlook yesterday. They were slightly bullish in Futures but bearish in options.
So overall they too have a negative bias though not too strong. However they continue to sell in
cash market.

5. World markets: This will be major factor today as DOW climbed 200 points in spot yesterday
but is 80 points down in morning in futures. Asian Markets are also looking slightly weak in
morning and so is SGX Nifty.

6. NEWS: The PM address had nothing specific for markets I believe.

Corona news is getting bad.

Chinese geopolitical tension is not good for markets whose implications can be seen with Tiktok’s
investment plan in Indian being seen in Jeopardy and China referring to WTO violations over
India’s actions.

Chinese PMI index measure of factory output looks promising as Factory output has increased
but still exports not rising much.

So with all these factors we may have another range bound day with a negative bias. World
markets would play a major role today and important support and resistances levels would have
to be broken with volume to establish any trend.

Regards

Ishan Dwivedi

01 July 2020.