Yesterday saw the biggest intraday fall ever in terms of percentages for Nifty as we lost more than 13% on a single day. There was a circuit stop in the morning but that couldn’t prevent it from falling further as Nifty kept losing even after after a 10% fall and lost another 3% by the end of the day. The biggest worry is now moving from Corona deaths to what happens after that.
The US senate yesterday failed to clear and package and that had pushed Dow Jones into negative territory losing 500 plus points. But all that has changed in the morning, as Fed came up with a fresh stimulus by launching an open end asset purchase programme that will go on for unlimited time. This has triggered a positive sentiment across the Asian markets and all the Asian markets are up between 4 to 6% and Brent crude also jumped to 28 dollars.
On the domestic front, the worry of COVID-19 and the lock down in 76 districts across India has triggered a panic selling which led to a fall of more than 1100 points. There is a talk of a financial stimulus that was supposed to come, and it is likely to come sometime this week. The big worry is yesterday reported the highest ever number of 99 cases and now we are almost breaking into Stage III.
Next 2-3 days will decide whether we will stop here or progress into 3rd stage. Technically, we have the 7600 which is the yesterday’s low that might act as a support and the first resistance might come between 8100 which if it taken out will take Nifty directly to 8500 mark. Everything depends on the number of cases reported and the financial package and when it will be announced.
On the derivatives front, this is expiry week and if you look at the volumes yesterday they were just 4.1 lakh crore and there is no interest among large segments of people. There were long positions built in futures market along with shorts and the overall longs remained at 42% vs 41% yesterday. However in the options market the Nifty PCR fell to 1.04 from 1.17 and this was on the back of call shorting that happened as Nifty fell yesterday.
The overall roll overs for Nifty stood at 32% and we will have to see how many more roll overs will happen today. 8000 call added 6.9 lakh positions while 8500 call added 3.3 lakh positions and 8000 and 8500 call have the highest OI on call side while on put side 8100 and 8500 puts have the highest OI followed by 7500 put. So, 7500-8500 could be the range for 26th expiry.
What is the Nifty call for the day?
Fed announcing a financial stimulus seems to have a very positive impact on Asia and even SGX is showing a positive tick of 400 points and we are likely to open in the range of 7800-7900 and we might go to 8100 within minutes of opening. What happens after that needs to be seen, whether we will see 8500 being hit today or not. If there is no negative news coming in, we might close above 8000 mark, which is very crucial for our future trading. We cant stay away forever but entering in a volatile market is also not desirable.
So, for today we will stay out and see if Nifty can form a base and close above 8000. Once the virus cases come under control and a financial package gets announced then we can restart our trading, hopefully in couple of days.