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Yesterday we saw Nifty opening higher, made an attempt to go towards 9050 which is a resistance point, saw a huge selling there and it closed below 8900 mark. This is happening on a day when global cues were very positive and it shows how bearish our markets are. It was the financials that have dragged Nifty and you can see that in Bank Nifty which has shown a considerable amount of weakness.

Today we have different global cues where the vaccine news is old now and Dow Jones lost nearly 400 points on profit-taking on the news of the success of the vaccine, weak earnings and the problems associated with re-opening of the European economy. The Asian markets are in the mixed zone today following the US markets where Japan up 150 points and Hong Kong down nearly 50 points. Brent crude is still hovering around 34-35 dollar mark.

Domestic Cues

There is an opening up of economy that is happening but the backdrop is looking bad. Coronavirus cases have crossed the 6200 mark in the last 24 hours and this is the highest that we have ever seen on a single day. There is a chaos on migrant labour front and opening up of the economy and whether the stimulus that is given to the economy is good enough to pull us out of the problems that we have gotten into.

Technically we have gone into a different zone with breaking of 9050 mark and we touching 8800. 8750 marks the 25% retracement from the lows of 7511 we made and we need to see if 8750 holds or not. If we don’t then re-testing of 7500 will happen and if 8750 is protected then 9350 which coincides with 38.2% of the retracement will be the resistance for Nifty. Next few days should tell us which direction we are going.

Derivatives Cues

The action was quite different. As the Nifty went up in the morning and was correcting in the afternoon, long positions were continuously being built in Nifty Futures and yesterday we saw the highest number of long positions built in May series and that took the overall long positions from 24% to 47%. Now we have almost the same number of longs and shorts.

In the options market also there was some bullishness shown with Nifty PCR picking from 0.95 at the start of the day to end at 1.04 mark. 8900 put added 3.6 lakh contracts while 8800 put added 3.4 lakh contracts and 8800, 8700, 8600 and 8500 have similar OI indicating that the base could range from 8500-8800 mark. On the call side, 9000 call has the highest OI followed by 9200 indicating 8800-9000 as the short-range and 8500-9200 as long-range for tomorrow’s expiry.

What is the Nifty call for the day?

We have a flat Asia and a slightly positive SGX Nifty indicating a slight gap up opening for us around 8920-8950 mark and we need to look whether Nifty will conquer 9000 mark or not. Today I am going to give a different call. If Nifty is able to conquer 9000 and if the rally fails and if 9000 is broken then I advise you to take a short position with 40-60 point profit.

This can happen anytime during the day between 10am to 2 pm. If the 9000 mark is not broken and Nifty stays above that, then you have to wait and there won’t be any trade for you. Seeing where Nifty closes is another important thing for us to decide whether we are on our way towards breaking the 8750 mark and going towards 7500 or breaking 9050 mark and going towards 9350. For this holding or not holding 9000 is very important.