Category Archives: Market Setup

Trade Setup/Market Setup

Visit this column every morning on weekdays to know how Indian markets will fare and read the predictions on market behavior. Nifty, Sensex and Bank Nifty and many more important news will be discussed in a short 200-300 word post. Predictions are all based on my own learning and perceptions. The information posted should not be used by others for wrong reasons.

Happy Investing!


Market Trade Setup 19th October #NIFTY

Market Trade Setup 19th October 

Last day of the week but not great way to start with. I had told you on Wednesday to exit your positions and you would have pocketed more than 140 points if you have closed your positions till 10am. What we saw on Wednesday was vertical fall from open of 10710 to 10450. This is more than 250 point fall. Yesterday we were not trading but there was a fall across Asia and that will surely be priced in today’s opening.  The Dow Jones fell more than 200 points yesterday on the back of news from Fed minutes that the interest rates cycle will continue and fed will keep rising the interest rates in future also. 

There were other bad news as well for the market with dollar index going up to 96 and that means rupee will again go back to 74 level today and might hit another all-time low. Added to that is the China GDP data for Q3 which came in at 6.5% which is the lowest we have seen in the last 9 years. Last time China had 6.5% GDP was in 2009 when World was going through investment banking crisis. The result is entire Asia is in negative. The only good news is Brent crude which is below 80 dollars now trading at 79.5 dollars.

On the domestic front bad news for China is good news for India and Chinese GDP drop might pull FII inflows into India. Crude below 80 dollars is also good for India so it is not such a bad scenario for India. The only negative for us is not so good Q3 results.  HUL though the numbers were good the margins disappointed. Same is the case with Reliance which also showed some margins pressure and ACC cements also was not upto the mark. So if today’s results disappoint things might be under pressure otherwise things are not as bad as they look.

On the derivatives front was a massive selling that happened on Wednesday with NIFTY started to fall. The NIFTY premium which was at 5 points at the open ended into a discount of 10 points by the end of the day. The story is clear. A lot of bearish positions were built on Wednesday and a gapdown today means a lot of short covering that can be seen. On the options front the NIFTY put call ratio dropped to 1.11 from 1.20 on the back of increasing demand for calls. 10000 put and 11000 calls still stand as markers but expect that to change today.

What is the Nifty call for the day?

A gap down is expected and if nifty opens below 10400 then expect a short covering for all those positions taken on Wednesday which might take the market past 10500 and even as high as 10580. Adverse news might make nifty test 10300 levels. A day like this is better to wait and watch than take any positions. Weekend is always a time for less risk so no positions for today.

Market Trade setup 17th October #NIFTY

Market Trade setup 17th October 

What a day it was yesterday. The rally which started on Navratri has taken NIFTY up by more than 450 points till now. Today is the last trading day of Navratri and tomorrow is a market holiday.  Dow Jones had a fantastic 550 points rally on the back of some good Q3 earnings in US. That seem to have caught up with the rest of the world and Asia is green today with all markets in green and the only worry is Brent crude which is at 81.5 dollars now. 

On the domestic front rupee has been stronger throughout the day and with positive trade deficit data things were looking brighter and that resulted in the rally. Apart from that the Q2 results were also good with infosys reporting a decent earning and Hero moto not disappointing much. Today is another Important day for earnings with many mid cap IT companies reporting their earnings. These include cyient, NIIT tech mind tree etv and the cement major ACC cements. 

On the derivatives front things are looking brighter with many long positions being built on NIFTY futures. Today is bank NIFTY weekly expiry and that could impact some positions and bring in some volatility. The overall long exposure in NIFTY futures in long positions stand at 32% now vs 31% seen yesterday.  On the options front also the NIFTY put call ratio improved to 1.24 from 1.20 and that is majorly on the back of shorts taken on put side. 10200 is slowly forming as the base for market as we are moving towards 11000.

What is the Nifty call for the day?

Today we will have a fantastic start with a gap up of nearly 100 points and that means we reach the door step of 10700. The position you have taken around 10540 to 10560 will give you handsome profit. Yesterday I advised you to carry the positions and today you will enjoy the benefits of 140 points gain on your positions. Tomorrow is a holiday so close all tour positions and take the profits and celebrate Dasara. Happy Dasara to all.

Market Trade Setup 16th October #Nifty

Market Trade Setup 16th October

I told you to go long and you would have earned money by going long yesterday. It was a revival after a 700 point fall and Nifty conquers 10500 yesterday which is a good sign. The reason for my confidence yesterday was the open interest at 11000 call. Till the time it has the maximum open interest the chances of Nifty going towards 11000 is always there. A week ago when Nifty was at 10100 if someone told you that within a week we will reach 10500 you would not have believed. Today 10500 is a reality. So a week later 10900 can also be a reality. So, watch the cues carefully before coming to a conclusion.

Today things look good overall though, the missing US journalist from Saudi was found dead. Dow Closed on flat territory and today the entire Asia is trading in the green. Hong Kong is up 170 points and even Japan which goes with US is also in the green up by 140 points. The good news is that Brent Crude is still at 81 dollars and dollar index is softening a bit which means the Rupee will recover a bit more and might stay in 73 levels itself and there were some worries on rupee front yesterday when at some point it crossed 74 per dollar.

On the domestics, we have a good news in the form of Trade deficit data that came at a 5 month low of 13.98 billion dollars despite high oil prices. The exports in rupee terms has grown nearly 10% and imports by 23%. This means the Rupee will become stronger and that will surely put some positivity in the equities market. The Q2 results are coming good and IndusInd and India bulls housing finance didnt disappoint yesterday. Delta Corp reported a strong numbers and many brokerages have given a buy to this stock.

Today is another important day and following are the Q2 results expected today. 

1. Crisil
2. Federal bank
3. Hero Motocorp
4. Infosys
5. J&K bank

On the derivatives front, there was red on Nifty for sometime and that triggered short positions in Nifty futures and the overall long positions still stands at 31%. The worrying point however was the Nifty futures premium just standing at 3 points. A rising nifty not resulting the proportionate rise in Nifty futures is not a bullish sign. On the options front also the Nifty put call ratio remained stable at 1.20 vs 1.21 seen at the beginning of the day yesterday. We can see the early signs of the base of the market shifting from 10000 to 10200 which is a positive sign.

What is the Nifty call for the day?

A green Asia and a positive trade deficit data means we will open positive around 10540. This is the resistance zone. What should you do? This is where you need to be bit careful. It is wise to wait and watch and take a long position only when Nifty drops below 10500 level between 10480-10500 with 10540 as the target. A small gain is what you can look at today but if Nifty goes up majorly, your profits also will increase. If the targets are not met, carry the positions forward to next day.

Market Trade Setup 15th October #NIFTY

Market set up 15th October

Third week of the month starts on a different note. Winter is slowly setting in and hope this also brings change in the momentum and the outlook of the market. Friday saw a mammoth rally of nearly 300 points and that has brought us back and erased many losses made. Now we are touching 10500 levels, something we didnt dream of just 3 days ago. US ended on the positive territory on Friday with Dow gaining close to 300 points like nifty and Brent Crude is also at 81.4 dollars which is very tolerable. Asia today is in red due to disappearance of a journalist in Saudi Arabia and the tensions.

On the domestic front, we have a different cues to play with. The inflation numbers have come for the month of September and the inflation is again lower than 4% comes at 3.77% vs 3.69% seen in August and 3.28% seen in September last year. This means practically there is no rise in inflation and RBI’s decision of not hiking the interest rates was right and markets might have to acknowledge this. The only worry is Rupee now and if that stabilizes then things would look rosy. Only worry is IIP that comes at 4.3% but market would like to ignore it on the back of CPI. On the Q2 results front, this week is going to be important with lot of big companies lined up for results.

Following are the Q2 results expected today. 

1. Delta Corp
2. Indiabulls Housing Finance
3. IndusInd bank
4. Network 18
5. Reliance Industrial Infrastructure
6. South Indian bank
7. TV18 Broadcasting 
8. Zee Media

On the derivatives front, there was a massive short covering that was seen as markets was recovering from the fall. Though the buying on the Futures was limited many traders who have taken short positions started to unwind their positions as the markets went up. This was reflected very clearly on the options market where the Nifty put call ratio went up to 1.21 from 1.07 seen at the beginning of Friday. All across there was demand for puts with 10100 put adding 6.1 lakh positions, 10400 put adding 6 lakh positions, 10300 put adding 5.7 lakh positions. The traders are shorting these puts to cash on in the rise in premiums of these puts as markets fell. 10000 put and 11000 call still continue to have highest accumulated open interest indicating there is lot of upside still left.

What is the Nifty call for the day?

Nifty will have a open around 10450 level on the back of a weak Asia, and there is a fundamental of geo-political tension arising with the disappearance of US journalist from Saudi. At the lower end Nifty might test 10380 levels and will get support in 10380-10400levels and on the upside 10500-10520 is a resistance level. You can go long again today when Nifty is below 10450 levels with 10500-10520 or 50-60 points as the target from wherever you take that position.

Market Trade Setup 12th October #NIFTY

Market Trade Setup 12th October

Yesterday was a red day globally and when we ended more than 250 points down on Nifty, all the European markets ended in red and the US markets also were in the sea of red. Dow Jones fell by 550 points and in just 2 days Dow lost 1400 points which is huge. All the European markets also fell by nearly 2% including Russia. But today morning seems to be a slightly different day in Asia with some recovery seen in Asia. If Japan is down 120 points, Hong Kong is up 130 points. Even the Dow futures is indicating a recovery and all that will put some positivity when we open in half an hour time from now.

On the domestic front, the biggest positive for us will be the drop in Brent Crude prices which is now trading at 80.6 dollars. Clearly it is a big drop from 86.7 dollars seen just 4 days ago. We can see petrol prices coming down a bit today. Apart from that Rupee also seems to have stabilized and today it might move around 74 and might even come down below 74. On the Q2 results front, TCS came out with their Q2 last evening and it is a decent number if not a great number. It might not take the stock up, but TCS which fell by 12% in recent time, might stop the fall and start to recover.

Following are the Q2 results expected today. 

1. Hindustan Unilever
2. Karnataka Bank
3. Tata sponge

On the derivatives front, the 300 point fall on Nifty has triggered a massive shorting in the Nifty futures and for sometime, Nifty futures went from premium to discount. This has resulted in a massive fall and the overall positions on Nifty futures now stand at 33% which is again the lowest in this series. In the options market, even the put call ratio has dropped to the lowest in multi series of 1.08 from 1.27 we seen at the before opening yesterday. Many puts unwound their positions and its the calls that were in demand. 10500 call added 9.5 lakh positions and 10600 call added 6.6 lakh positions and 10300 call added 6.3 lakh positions. Still 10000 put and 11000 call continue to have the highest accumulated open interest indicating a high volatile movement in this series.

What is the Nifty call for the day?

Today Nifty will open slightly positive around 10250-10270 levels and today’s markers on the upside is 10350-10380 level and on the downside 10180 is a strong support. Thus today we can have some volatility and I suggest taking a long position in the Nifty around 10260-10280 levels with 10350 as the target. You can minimum look for 40-50 point profit. Yesterday also, if you have entered at 10200 levels you would have made almost 80 points as Nifty went to 10280 before correcting.

Market Trade Setup 11th October #NIFTY

Market Trade Setup 11th October

An important lesson to learn in the market is every break out is not a true break out, whatever may be the reason quoted. Yesterday, on the back of the fundamental news of SBI taking over some of the bad loans of NBFCs we have seen a huge rally of 150 points and 10400 level was crossed. But look at today. We are going to witness the worst opening of 2018 when Nifty will open more than 250 points down right at 10200 level. This presents the danger of Nifty even moving towards 10150-10180 zone and all the euphoria that last 2 days has generated will be gone by today afternoon. What triggered this sell off?

Its a global fall triggered by the fact that inflation in US is going up and so will be the interest rates and some excessive valuation of equities, bonds and commodities was done not taking into consideration the right growth and inflation trajectory. Dow Jones lost more than 850 points, NASDAQ saw the worst fall in 2 years losing 400 points and Brent Crude came crashing down from above 85 dollars to 81.8 dollars and Asia is in the ocean of red with Japan and Hong kong both down more than 900 points each. In the world of such red what is the use of talking about Indian fundamentals? TCS will come up with their Q2 results in the evening today.

On the derivatives front, we have seen some danger signals yesterday itself when the futures premium has dropped from 30 points to just 6 points. That indicates that though Nifty is going up the Nifty futures value is not going up by that much indicating that the bullishness seen in cash market was not reflected in Futures market of Nifty index. Options market also saw some bullishness with puts more in demand than calls and the Nifty put call ratio has risen to 1.16 from 1.12. 10000 put and 11000 call still continue to have maximum accumulated open interest but no use talking about it as today things are going to change rapidly.

What is the Nifty call for the day?

Asian markets and SGX shows that Nifty will open around 10200 levels and when you have such a big fall what do you do? Options markets indicate that 9950 is the bottom for this market. So, I suggest just wait and see what exactly is the bottom. Carefully observe the Dow Futures and how europe opens. If you feel that bottom is in place at 10100 or 10200 or 10250 or 10050 take a long position with small 40-60 point target and play safe. Today is going to be a tough day so trade cautiously.

Market Trade Setup 10th October #Nifty

Market set up 10th October

Some sanity seems to have arrived in the market yesterday and people are now getting profits when they are buying. Yes, bulls are back and after a bear rule for almost 10 days, bulls are slowly coming back, inch by inch. Yesterday’s 80 point rally from the bottom after a volatile Monday is an indication that things are slowly turning for bulls. You might have profited from the longs taken yesterday and today is a different day. Today’s global cues are mixed with US markets ending flat to negative and Asia today is trading in flat to positive zone. The dollar index has corrected to 95.5 from 95.8 and Brent Crude is trading at 84.8 dollars which means not much pressure on Petrol prices today.

On the domestics front, the rupee has been falling despite dollar index falling and today maybe we can expect Rupee to come below 74 mark. The big news for the day is SBI announcing that it will buy the good quality NBFC stocks and that means good tidings for these NBFCs which have been battered and lost around 30-60% in the last few days. There might be some recovery in those stocks. In other news, Q2 results will officially kick off from today.

Following are the Q2 results expected today.
1. Bandhan bank
2. Indiabulls Ventures
3. Zee entertainment 

On the derivatives front, yesterday was a perfect day with equal number of long and short positions taken in the Futures market and the premium remained more or less stable. The options market has also seen equal number of positions on calls and puts and that kept the Nifty put call ratio almost stable at 1.11 from 1.12 see at the beginning at the day yesterday. 10000 put added 2.2 lakh positions and now it is establishing itself as the base for this series. On the call side 11000 call added 3.7 lakh positions and it is now establishing itself as the roof for the series. At 10300 we have a lot of room to go up in the series as for the options chart is concerned.

What is the Nifty call for the day?

A flat to positive Asia means we will also open in green around 10320-10340 levels and last 2 days have shown that 10400 is a big resistance that Nifty was not able to climb. To go to that 11000 Nifty has to cross this 10400 hurdle and we need a fundamental news for that to happen. But for today, you can again take a long position anywhere around 10310-10340 zone with 10380-10400 as  the target. You can again look at 50-60 point profit margin. On the down side, Nifty might find support at 10250 level and avoid taking positions if Nifty by any chance goes below 10250 today.

Market Trade Setup 9th October #Nifty

Market set up 9th October

What a see-saw Monday we had!! Nifty moved to 10200 quickly as soon as it opened and then before 12 noon went as high as 10400 and then fell to 10200 again by afternoon and went up almost to 10400 by 3PM only to settle down at 10348. This is the reason why I asked you to stay out of market. You could have profited from market taking both long and shorts but if you are not clear when to take what position, you would end up losing a lot of money. So, money in the pocket is always better than money burnt. The see-saw movement however gave an indication that a temporary bottom is formed at 10200  and we need to see if Nifty has the ability yo move forward.

Globally things look not so great for a great rally. IMF has cut the global growth forecast to 3.6% from 3.8% and it was China and US that have seen a growth cut and India’s growth forecast remains unchanged at 7.3%. So, this might be bit negative for others and positive for India. The US bond yields have reached a 7 year high of 3.24% and now there is some kind of exhaustion coming into the global markets now. Dow Jones closed flat yesterday and all the Asian markets except Japan are also trading in the flat to positive zone today. Hong Kong is up 150 points and Japan is down 200 points and all the other Asian markets including China are in the positive territory.

Coming to domestics, Brent Crude seems to have settled down at 84 dollars and that is much better than 86 touched last week. The dollar index is at 95.7 and that is a bit less than 96.2 seen yesterday and that means Rupee that closed at another all time low of 74.06 yesterday, might open less than 74 and that might act as positive for banking stocks. There are no other big fundamentals affecting the market except the Q2 results starting from tomorrow and also the CPI and IIP data expected to come during the later half of the week. So, today will be more of a technical day than fundamentals affecting Nifty today.

On the derivatives front, there has been finally some relief in the continuous selling that was taking place the whole of last week and some buying has started in the Futures market. The overall long positions in Futures still remain lower at 36%. On the options front, the Nifty put call ratio has climbed from 1.07 at the beginning of the day to 1.12 at the end of the day. The big news however is 10500 put losing its base and 10000 put now becoming the new base for Nifty. 10000 put added 14.5 lakh positions yesterday and so now we can have Nifty touching 10000 levels if we have to look at the options chart. On the call side 11000 still remains as the roof for the market so, there is a huge room of 1000 points is available for Nifty in this series and so volatility also has crossed 20% for the first time this series.

What is the Nifty call for the day?

Nifty might open slightly positive above 10350 levels and 10420-10450 is the range where Nifty will face resistance. So, if Nifty remains above 10320 it might test the 10420-10450levels. So, its better to go long at the open with 10420-10450 as the target. If that is not possible try to see a dip below 10380 and enter by taking a long position with 40-60 point profit band. You can wait and take these positions at any time of the day till the last one hour. So, carefully observe the movement before venturing in.

Market Trade Setup 8th October #NIFTY

Market Trade Setup 8th October

Start of the 2nd week starts and we are yet to recover from shocks of the first week. Nifty has seen the biggest fall in 9 years see at 6.1% and we have seen 700 points getting wiped out in a week’s time. If you see this week, globally things are looking mixed. The US is growing big time, strengthening the dollar and that is making all the other currencies weaker. The jobs data that came on Friday in the US shows that the unemployment rate in the US is at the lowest level in the last 49 years. China, the second largest economy in the World is going through some problems and the Central bank of China has decreased the CRR there to increase the liquidity in the economy, thus increasing the demand for loans. China is down by 1%, Hong Kong is down by 400 points and India will have some pressure of all this at the opening. 

Domestics and Derivatives! 

Coming to the domestics, the biggest jolt was given to us by RBI in our monetary policy on Friday, where the rates have been kept unchanged. The reason given was why should rates go up when inflation is not going up? This is a valid reason but a depreciating rupee needed higher interest rates to stabilize and since RBI did not hike rates to save rupee there was a massive sell-off in Nifty, which fell close to 290 points. For today, the biggest relief is from the Crude which fell from 86 dollars to 83.2 dollars and that might come as a huge relief. Apart from that the Q2 results season starts this week and Zee Entertainment will be the first company to declare results on Wednesday. 

On the derivatives front, there was a massive selling seen on Friday where 30 short positions were taken on Nifty futures for every long position. That has brought down the overall long positions in Futures market to 36% from 46% seen at the beginning of the series. On the options front, there was a lot of action on the call front and 7 calls were shorted for every 2 short puts and that brought the Nifty put-call ratio down to just 1.07 from 1.21 seen at the beginning of the day on Friday. 10200 put added 4.5 lakh positions while 10700 put shed 6.8 lakh contracts and 10500 put shed 8.3 lakh contracts, On the call side 10500 call added 16.7 lakh contracts, 10700 call added 11.2 lakh contracts and 10800 call added 14.5 lakh contracts. 11000 on the call side and 10500 on put side continue to have the maximum accumulated open interests. 

What is the Nifty call for the day?

After 700 point fall in 4 days, what can we expect? Nifty will open slightly gap down today around 10280-10300 level and immediate support will come at 10260 and what happens from there needs to be seen. 10380-10420 is a resistance zone and will Nifty overcome that or not needs to be seen. Today for me is a wait and watch day. After such big falls, its not safe to jump into trades now. Already you have a position and keep it intact and let’s observe the markets today to decide on the further course of action.