The Futures Open Interest (OI) indicated a buildup of long positions in Nifty futures with the Long-Short Ratio standing at 59.99% on December 18 as the FPIs continued to increase their exposure to long in the index futures, Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities said.
A look at the derivatives data suggests that the PUT writers aggressively built positions at the 21,400 Strike and the maximum CALL open interest strike of 21,500 in Nifty. “The CALL writers are, however, marginally ahead of the put writers at the 21,500 Strike at the day’s close. The option activity at 21,500 Strike will provide cues about Nifty direction in the coming days,” the SAMCO analyst said.
We spoke to analysts on how one should trade stocks that were in focus in the previous trading sessions based on derivative and technical data:
Analyst: Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research, SBI Securities told this to ETMarkets
Voltas is verge of giving trendline breakout
The stock of Voltas is on the verge of giving a downward-sloping trendline breakout on a daily scale formed by connecting swing highs from February 2023. On Tuesday, the stock witnessed more than three times its 50-day average volume. The 50-day average volume stood at 11.57 lakh, while on Tuesday, the stock recorded an impressive total volume of 40.21 lakh. This shows the accumulation before the actual breakout happens. Additionally, the stock formed a sizeable bullish candle on a daily scale.
Currently, the stock is trading above its short and long-term moving averages. The 20, 50 and 100-day EMA has started edging higher. While, the falling slope of the 200-day EMA has slowed down significantly, which is a bullish sign. The daily RSI is in the super bullish zone as per RSI range shift rules. On the daily timeframe, ADX is at 21.56 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI.
In the December series, Voltas’ future has surged by nearly 5% in the last three trading sessions. The combined Open Interest (OI) across the current, next, and far series has also risen by 5.44% in the last three trading sessions, pointing towards evident long build-up. There is a notable concentration of CALL open interest at the 900 strike, while significant open interest on the put side is observed at the 900 strike, followed by 850 strike. Tuesday’s trading activity reveals a surge in long positions from 900 to 1000 CALL (CE) strikes, and on the put side, put writing is observed from 870 to 920 PUT (PE) strikes. This collective data strongly suggests an overall bullish sentiment in the derivative space.
Hence, we recommend accumulating the stock in the zone of Rs 900-890 level with a stop loss of Rs 865 on a closing basis. On the upside, it is likely to test the level of Rs 940, followed by Rs 970 in the short-term.
F&O data suggest long build up in Coal India
The stock of Coal India has given consolidation breakout in February and thereafter it has marked the sequence of higher tops and higher bottoms. It has surged by over 61% in just 73 trading sessions. On Tuesday, it gave a 10-day consolidation breakout on a daily scale. This breakout was supported by robust volume. In addition, the stock has formed a sizable bullish candle on breakout day, which adds strength to the breakout.
As the stock is trading at 52-week, it is trading above its short and long-term moving averages. These averages are in a rising trajectory and they are in the desired sequence, which is a bullish sign. The momentum indicators and oscillators also portray a positive picture for the stock.
On the derivative front, the December series future has surged by 6%. The cumulative OI of current, next and far series has surged by 6.08%, which clearly indicates overall long build-up. There is a notable concentration of call open interest at the 370 strike, followed by 380 strike. Significant open interest on the put side is observed at the 365 strike, followed by the 360 strike. Talking about the option chains, from 365 to 375 CE strikes have witnessed a long build-up. While, on the put side, from 350 to 380 strikes have witnessed put writing. This indicates bullish momentum in the stock.
Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 385 followed by Rs 395 in the short-medium term. Stop loss can be maintained at Rs 355 on a closing basis.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)