Today is the expiry day and some cheer is back on the markets as Nifty gained 500 plus points rally yesterday. I had talked about it in my post yesterday and it was mainly on the back of US rally of over 11% seen. These are the days of single day rallies and if you think it will be a everyday, it might not be so.
But US markets are still celebrating the 2 trillion rescue package announced by Fed, which accounts to around 5% of the US GDP. As a result went up another 500 points last night but the scene outside is different. After Italy, Spain is now the epicenter of Corona scare and the overall affected people figure has crossed 4.7 lakh and the number of death are at 21,000 and that seems to be worrying the World. The result is all the Asian markets are mixed today with Hong Kong and Japan down while Shanghai and Korea are up.
On the domestic front today is the monthly expiry for Nifty and this is the worst series that Nifty has seen since October 2008. In that month Nifty lost 34% of its value in a single series and in this series Nifty is down 28% making it the 2nd worst series in its history. We started the series at 11633 and now we are at 8317. This will be the 3rd series for bears and except Jan feries which ended in mild red, both Feb and March are clearly in favor of bears.
Now the question is whether we have formed the base around 7700-8000 mark or are we going to test that level further? Base formation is a time consuming process and we could see Nifty going below 8000 one more time before the base is actually made. But for today the expiry factors will drive the markets and move today should be seen from the point of view of expiry factors only.
On the derivatives front, the monthly expiry has arrived and the Futures market reported 47% rollovers and the overall long positions remained stagnant at 53%. The premium in Nifty has improved a bit and that doesnt matter anymore as today the series is going to end. The real action was in options market where the Nifty PCR jumped from 1.07 to 1.22 mark and this was on huge shorting seen in the puts ahead of expiry.
7000 put added 4.9 lakh positions while 8000 put added 4.2 lakh positions and 8200 put added 3.4 lakh positions. 7000 put has the highest OI today followed by 7500. On the call side 8800 call added 3.3 lakh positions while 9000 call added 3.1 lakh positions and 8600 call added 2.1 lakh positions. 9000 call has the highest OI followed by 8500 call for today’s expiry indicating that expiry factors may take Nifty to 8500 or 9000 mark.
What is the Nifty call for the day?
Yesterday, I asked you to enter Nifty if it stays above 7500 mark and if you had entered after the early morning correction to 7700, you would have made some good profit. Today also is going to be a similar story like yesterday in terms of strategy. Today is the expiry day so one needs to be very careful. Today we can have an opening in 8250-8350 range and you can go for long positions only if Nifty protects 8200 mark.
If 8200 is taken out and Nifty is unable to regain it, then stay away. If 8200 is held then take a long trade for today and keep a 50-80 point target and exit as soon as you reach the target. This is not a market to speculate and burn your fingers. Strictly stay away if Nifty stays below 8200 even for an hour or more than that.