Three Indian features change what a chart means, and none of them appears in a Western textbook.
How do circuit bands work, and what do they do to a chart?
The first is the circuit band. Individual stocks trade inside daily price bands set by the exchanges, commonly 2%, 5%, 10% or 20% of the previous close, with derivative-eligible names on a flexing dynamic band, and the market-wide breakers on the index sit at 10%, 15% and 20%. Those percentages and the eligibility rules are set by circular and change, so verify them against the current exchange and SEBI documents. A stock at its upper circuit has buyers and no sellers, so the last traded price is a ceiling rather than a clearing price.
Watch what that does to a chart. A stock closing at ₹486.30 and hitting a 5% upper circuit on five consecutive sessions prints ₹510.62, ₹536.15, ₹562.95, ₹591.10 and ₹620.66, a cumulative 27.6282% rise on almost no traded volume. A candlestick chart of those five sessions shows five near-doji marks with gaps between them, which any pattern vocabulary would read as indecision, when what actually happened is that the order book never cleared. A twenty-session simple average absorbing those five closes rises by 19.4985 points from them alone.
Every indicator built on those closes is built on prices at which almost nothing traded.
Advertisement
What does the delivery percentage tell you?
The second is the delivery percentage. Indian exchanges publish, per stock per day, the share of traded volume that went to delivery rather than being squared off intraday, which is the closest available measure of how much of a day's activity was positioning rather than churn. In the ten-session table in Worked Example 7 the price rises 6.29% while mean delivery share falls from 35.58% in the first five sessions to 23.00% in the last five, and mean volume rises 153.75%. Delivered shares did rise, by 70.32%, but non-delivery volume rose 196.42%.
The rally was increasingly intraday.
State the measurement caveat whenever you use the number. Algorithmic market-making and genuine intraday trading both suppress the ratio without implying anything about conviction, and the ratio is naturally lower in high-turnover large caps than in illiquid small caps.
What does open interest tell you?
The third is open interest. For derivative-eligible names the exchange publishes the number of contracts outstanding, which unlike volume is a stock rather than a flow: it rises when both sides open a new position and falls when a position is closed. Combined with the price change it gives the standard four-cell reading. Price up with open interest up is a long build-up; price up with open interest down is short covering; price down with open interest up is a short build-up; price down with open interest down is long unwinding.
That table is informative because it separates new commitment from position closing, which no price series can do.
Scale it before you read it. At 8,460 contracts of 1,250 shares against a ₹528.40 price, notional open interest is ₹558.78 crore, and the 10,575,000 shares involved are 22.60% of a 46,800,000-share free float. Lot sizes are set by exchange circular and are revised, so verify the current lot before computing anything.
What are rollover and the F&O ban period?
Two further Indian mechanics belong here. The rollover percentage near monthly expiry is the share of open interest carried into the next series, which measures whether positions are being renewed or closed. The ban period, when a stock's market-wide position limit is breached and only offsetting trades are permitted, distorts both price and open interest for as long as it lasts, and any indicator computed through it is unreliable.