After days of negativity, finally, we saw some positive closing yesterday when Nifty notwithstanding all the negative cues from Asia went on to open positive and remained there, touched 11000 mark and then closed around the 10950 which means the support of 10850 is holding as of now.
Today we woke up to the sad news of Sushma swaraj passing away and with a heavy heart, we move on and look at the business as usual. The US after seeing the worst day of 2019, closed in the positive territory yesterday gaining 300 points but Asian markets today are still sulking. Almost all them except Taiwan is in red and Hong Kong and Japan are both down 170 points each. The best news is coming from the Brent Crude front which is at a 7 month low of 58.9 dollars.
On the domestic front, the recovery of Nifty yesterday would mean we will stop the fall at roughly 10% correction and it will be confirmed if today also turns out be positive and we don’t breach the 10850 mark. Today is the day of monetary policy and with so much happening around, this could be a non-event.
A 25 bps cut would mean nothing but if MPC looks beyond this then only we can see some action on Nifty. Govt has taken some bold measures and if this rubs off on MPC then we could expect a 35 or 50bps rate cut which will push the Nifty up above 11000 decisively. Liquidity is an issue and that can be addressed only by cutting the cost of borrowing and making the money available at a cheaper cost. Let’s see what the MPC will come up at 11.45am today.
On the derivatives front, there was some bit of selling by FIIs in the F&O market to the tune of 550 Cr but the buying from DIIs has pushed Nifty up yesterday. The long positions in the futures market, however, has come down to 26% which is the multi-year lowest now.
On the options front, the demand for the calls went up significantly and the Nifty put-call ratio is back to 1.18 mark from 1.01. 10700 put added 5.3 lakh positions while 10900 put added 5.2 lakh positions. 10800 put now overtook the 10500 put to emerge as the put with highest open interest and that means 10780 will come as a support in this series. On the call side, there was the unwinding of positions everywhere and 11200 call still continues to have the highest open interest followed by 11000 call.
What is the Nifty call for the day?
Like yesterday, today also Asia is in the red territory, but we might be obeying the Asian cues and we might open on the flat territory around 10930-10960 mark and if there is a downside 10850 will act as the first level of support. A strong 2nd support is at 10810 and 10810-10850 will be the support band for Nifty.
On the upside, 10980-11020 is a resistance level and only the positive news from the monetary policy can break this 11020 resistance. So, the trade for the day is once Nifty settles down, take a long position between 10880-10920 levels with 10980 as the target. If you meet your target before the monetary policy also you can exit. But taking positions after monetary policy could be risky, as there could be some selling post the monetary policy.