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A very interesting day ahead of us. Firstly, there is a long weekend ahead of us with Monday being declared as a holiday due to Ramzan. Secondly, RBI Governor is holding a press conference at 10 am today and in all likelihood, there could be a monetary policy in the offering. The monetary policy is supposed to come on 6th June, but it could be advanced by nearly 2 weeks owing to the economic conditions.

Coming to markets, cues are not looking good, as the US reported another 2.4 million people became unemployed and that takes total US unemployment to 38 million. Dow Jones, as a result, lost 100 points. On the other hand, the US is continuously attacking China for the virus outbreak and its inability to control it. As a result, Asia is in red with Hong Kong losing more than 900 points. Brent crude also lost a bit and trading at 35 dollars.

Domestic Cues

The big news today is going to be the Press conference by RBI governor and it is being widely speculated that it is going to be a monetary policy where the repo rate is likely to be brought down by another 50bps to bring the interest rates down further. If that happens then the repo will go to 3.90% the lowest since 1991. Meanwhile, Reliance pulled off another 11000 plus crore investment this time from KKR and we now have 5 investors in just 4 weeks.

Technically, Nifty is inbetween 20 dma of 9150 and 50dma of 9180 and to move towards 9350 this range has to be broken. On the downside 8750 is the support and Nifty touched 50dma in April which was at 9850 and corrected from there. Now again it touched 50dma at 9200, will it correct from here to 8750 or lower than that levels, possibly to 7500 in June needs to be seen.

Derivatives Cues

Yesterday was Nifty weekly options expiry but more action was there in Nifty futures. Interestingly, when Nifty was going up, there was a huge selling in Nifty futures, which is indicated by the shrinking of Nifty futures premium from 0 points to a discount of 31 points. The overall long positions also came down to 45% from 49%.

On the options front, we start off the May monthly expiry with a PCR of 1.28. 9200 call added 5.2 lakh positions followed by 9500 call which added 5.1 lakh positions and 10000 call also added 4.2 lakh positions and 10000 call has the highest OI on call side followed by 9500 call. On put side 9000 put added 7.2 lakh positions followed by 9100 put 6.7 lakh positions and 8500 put added 5.2 lakh positions and 9000 put has highest OI followed by 8500 and 8000 put indicating an 8500-9500 range for expiry.

What is the Nifty call for the day?

Today is the day when we have negative global cues, a long weekend and uncertain domestic cues to deal with and market would look for safety in that case. And safety now exists on the downside than on the upside. But there could be a monetary policy also, and if it comes and if it is positive then we can see a rally.

SGX indicates an opening above 9050 around 9080 level and if 9050 holds till 10am and if the monetary policy comes then you can take a long position for 40-60 points target. Exit as soon as you reach the target. But if 9050 is broken, then stay away. Stay away even if there is monetary policy. We need to see if 9000 will be protected or not and the market will again open on 26th May with just 3 trading sessions left for the expiry. In those situations, it’s better to be safe and avoid all trades.