As I write this post, SGX Nifty is 130 points down and does that really mean that all the gains we made in the last two days to conquer 12200 mark again and close at 12250 levels? The answer looks very uncertain. This is mainly due to the Corona virus scare. US markets on Friday ended 110 points down but what is big news is a whistle blower news on Corona virus.
We know that the data from China comes heavily guarded and Govt put out figures that 1400 people have been tested positive for corona virus. But a nurse has come out openly and said that more than 90,000 people are affected by it and that sent shock waves across the globe. Most of the Asian markets are shut due to Chinese new year holiday but Japan which is open is down 500 points and Brent crude has gone to 59 dollar mark.
Domestically, how much is this Corona virus scare is going to scare nifty needs to be seen. On Friday we were talking only about the ICICI bank results and we had the Q3 results coming on Saturday and it came more or less on the expected way, except slippages. Now, there are two ways of reading the results.
On one hand, the loan growth was good at 19%, the stressed assets and NII was the best in a long time and gross NPA has shown growth indicating positvity, but slippages have almost doubled that is bad. So, if we look at slippages which are thing of past ICICI has slipped but other parameters, ICICI did reasonably well. Technically, we will open at the 50dma of 12120 mark and 20dma of 12220 will act as a resistance and we need to see where Nifty will go after open. My bet is on the upside.
On the derivatives front, we had some buying that has returned to Nifty futures on Friday and we have seen the premium jump from 16 points to 22 points just 4 days before expiry. On the options front also, the Nifty put call ratio surged from 1.33 to 1.51 mark and it was mostly due to shorting of puts that happened in the 2:1 ratio, but there was also some put buying that was observed.
On Friday, 12200 put added 10.6 lakh positions and 12250 put added 8.9 lakh positions and 12000 and 12200 put now have highest OI on put side. On the call side, 12350 call added 3 lakh positions while 12250 call added 2 lakh positions while unwinding of positions was seen at other strikes. 12500 call firmly has the highest OI on the call side indicating a 12200-12500 expiry range and if there is a fall then 12000-12500 expiry range.
What is the Nifty call for the day?
Today it is going to be a fight between the good results of ICICI bank and the negative corona virus news, where 90,000 people seem to have affected by the virus is making news. We are likely to open with a big gap down of 80-100 points as a result of this, so expect a opening around 12150 mark and what happens from there needs to be seen. 50 dma is placed at 12120 mark and if there is buying due to positive ICICI news then we can expect Nifty to go to 12220 mark within hours.
If it is able to take out that level due to the impact of pre-budget rally, then we are back to Friday levels again. So, the trade for the day is to buy the dip around the 50dma and wait for how far Nifty will take you from there.