AAKASHAYA PATRA WEEKLY MARKET OVERVIEW: 25.10.2020

 

AAKASHAYA PATRA WEEKLY MARKET OVERVIEW: 25.10.2020

From the close of previous week our markets opened gap up on 1st day. After a gap up, our markets managed to close nearly where it opened for the day and that sets a good tone for the week ahead. 2nd day of the week, we saw some up move in the beginning but by the day end much of it got fizzled out. Wednesday was one peculiar day where we opened gap up and survived upper thrust but in final 2 hours, we saw a serious down move and before any market participants finds the reasons for it, we did  saw a great recovery from the day's low. Down move and up move happened in a quick succession leaving every traders in the jeopardy. Thursday and Friday were just a regular moves which finally led our benchmark NIFTY gaining +1.43% and BANKNIFTY gaining +4.03% for the week. The good news came from MIDCAP and SMALLCAP which silently outperformed the NIFTY with the gains of +3.09% and +2.65% respectively. From the sectors,REALTY moved the highest this time with +9.30% gains along with FINANCE +3.77% and METALS moving +4.86% for the week

 Technical View

For NIFTY the current week's OI data suggest that there are great additions in CALL OI that PUT OI in last couple days. However, the total accumulation on PUT OI is higher than that of CALL OI. This data tells us an important information, that market is under bullish tone as there are more accumulation on PUT OI but at the same time markets are heading towards important resistance zone. Where hig hest OI built up this time is CALL OI at 12000 strike and secondly at 12200 strike. Max PUT OI is found at 11800 strike which will act as a support for the coming week.

For BANKNIFTY weekly OI data suggests that CALL OI is quite higher than that of overall PUT OI accumulations. Also in last few days of the week the addition on CALL OI is quite high. This data gives a clear sign that BANKNIFTY in coming week has to face sever resistance on upside. 25000 is highest OI and doesn't seem easy to be broken. On the lower side at 24000 strike has lot of PUT OI adding and that is giving us very good support

Now, let’s dig into a bit of technical and understand why 11650 – 11600 is considered to be a strong as well as crucial support zone. If we connect all major highs from record highs in a descending order, the trend line / pull back support comes around this level, which coincides with the 20-day EMA as well. Hence, as long as this support is not violated, one should adopt a buy on dips strategy. A close below 11650 – 11600 would result in a short term trend reversal and hence,traders should start lightening up positions after it. Before this, intermediate supports are at 11820– 11775. Now, we are tad below 12000 and if we have to pre-empt any direction, we expect the Nifty to surpass 12000 – 12050 levels in coming days to head towards 12200 – 12400.If we are anticipating this to happen then there has to be some technical evidences to back this hypothesis and they are as follows:

 1) The ‘RSI-Smoothened’ for Nifty on weekly time frame chart has started moving northwards after entering a bullish territory above the 70 mark, which is likely to provide impetus,

2) After a long underperformance, banking started to show inherent strength and as we all know when financial starts participating in any rally; it is to be considered the robust one. To add to our conviction, the ‘ADX 14’ indicator on the daily chart is moving northwards after surpassing the 25 mark. This development generally unfolds a big trended move,

3) The undercurrent is strong and we are seeing different sectors participating one after another and the way midcap index is poised, another percent up move from hereon would confirm a strong breakout in ‘Nifty MIDCAP 50’ index. So, considering all this, odds are very much in favor of the bulls. But since we are approaching a mega global event (US Presidential election), we may see some volatility increasing and hence, keep a regular tab of all above mentioned levels”