PNB surges above 20-day EMA level; witnesses long build-up

The stock of Punjab National Bank has given a downward sloping trendline breakout as of November 09, 2020 and thereafter, surged sharply up to the level of Rs 42.65 level. From the low of Rs 26.30, the stock has witnessed almost 62 per cent upward momentum in just 29 trading sessions. However, after registering a high of Rs 42.65, the stock has witnessed an almost 26 per cent correction from the higher levels. The correction is halted near its crucial 200-DMA level.   

On Friday, the stock has surged above its short-term moving average, i.e. 20-day EMA level. The reversal from the support zone is supported by a robust volume of nearly three times of the 50-day average volume, indicating a strong buying interest by the market participants. The 50-day average volume was 7.73 crore, while on Friday, the stock has witnessed a total volume of 22.75 crore.   

The derivatives data is also suggesting a long build-up in the stock. On Friday, January series PNB stock future saw 5,80,64,000 addition of open interest, which is 169.34 per cent addition in the open interest. It indicates that there is a long build-up in the market. January month’s current open interest is 9,23,52,000.  

For January expiry, the open interest wise put-call ratio (PCR) is at 0.43. PCR is below one, which is suggesting that investors are purchasing more call options than put options. This signals that the investors are speculating a bullish trend, going forward.   

For January series, the highest call open interest is at 40 strikes with 1,68,48,000 OI. On the put side, the highest put open interest is at 30 strikes with 70,56,000 OI. For January expiry, the total call open interest is 5,23,04,000 and the put open interest is 2,26,40,000. The current derivative data suggests that Max Pain is at 35 for the monthly expiry.  

Going ahead, we expect the bias to remain positive as long as the stock sustains above the zone of Rs 32-Rs 31.40 levels. On the higher side, the level of Rs 35.70, followed by Rs 38.35 would be seen as the next resistance zone for the stock.    

On Friday, the stock of Punjab National Bank surged by 5.30 per cent and closed at Rs 34.80 per share. The stock opened at Rs 33.30 per share and hit an intraday high of Rs 34.95 and a low of Rs 33.10 per share on NSE.