Market Trade Setup 1st August
August is here and it starts off with the crucial monetary policy that would be watched closely by everyone. The global scenario looks very good before the MPC announcements today. Dow Jones after a fall yesterday has gained more than 100 points and resumed its upward journey. The US-China trade wars have calmed down and that has put Asia in green. Both Japan and Hong Kong are up more than 100 points and the best news is from Bent Crude which has fallen below 74 dollars after a week and it is trading at 73.7 dollars now. That should bring some cheer to Indian markets to.
On domestic front, today is the monetary policy result day and everyone will be looking at what the MPC has got to say. Most of it has been priced in already and market will not be surprised with a 25bps rate hike. That is where the tone of the policy plays a role. If there is a neutral stance and 25 bps hike then we might see markets being sideways and choppy. If the hike is dovish then we can see markets going up and if its a hawkish hike then we might see some dip happening in the market. Very less probability of a 50bps hike, if at all it happens you can see a lot of volatility. Another possibility is a hawkish tone and a pause on the rates. That also is remote possibility. Apart from all this, the growth and inflation forecast are also something that will be closely watched.
On the Q1 results front following are the Q1 results expected today.
1. Apollo Tyres
3. Exide Industries
4. Jindal SAW
5. Orient cement
6. Pidilite industries
7. Tata Global
8. Torrent Power
9. Zuari cements
On the derivatives front, there was a worry in the morning and a rally in the afternoon and it has kept the long positions in Nifty futures intact at 58%. On the options front, there was further more shorting of puts than buying calls and that has taken the Nifty put call ratio to 1.73 from 1.72. 11300 put continues to add open interest and it added 5.6 lakh contracts followed by 11200 put that added 4.6 lakh contracts. On the call side 11700 and 11400 calls were very active with 3.7 lakh and 3.4 lakh contracts getting added. 11600 call also added 1.8 lakh contracts. The point to be observed today is to see whether 11400 call will overtake 11500 call to have maximum accumulated open interest. The series started with 11500 call having maximum OI and now it has 27.8 lakh contracts and 11400 call is closely behind with 23.8 lakh contracts.
What is the Nifty call for the day?
Today we might see another all time high and looks like all time highs are becoming a norm. Nifty will open around 11360-11380 levels and today Nifty might conquer 11400 level for the first time ever. Do not look at taking any longs at these levels as they present very less chance of making money. Wait for a dip to come during the monetary policy announcements being made and when it dips below 11350 take a long position around 11310-11330 levels and keep 11380-11400 as the target. Yesterday, you would have profits yesterday by going short in early morning and covering it by afternoon. Opposite should be done today in the afternoon.