Finally some recovery is on the horizon. After getting battered on Saturday, Nifty came back on Monday and protected the budget day low of 11655 and closed above 11700 mark giving a hope that there could be some more short covering today and some more upside could be seen. For that to happen breaking of 11750 level is essential. But as we speak, the Corona scare continues as death toll has crossed 400 mark and the number of infected people also crossed 20,000 mark.
Globally however things look positive as US market after closing 600 points down yesterday recovered a bit and closed 120 points up. Asian markets are also in green today with Japan flat up 30 points and Hong Kong is trading green up 250 points. Good news from Brent crude that has fallen to 54.2 dollars now from 56 plus dollars.
On the domestic front, the sour feeling of the budget finally seems to have been going off and that can be seen not only in the equities but also in currencies and bonds. Both currency and bond markets were not trading on budget day but when they opened on Monday, they showed optimism.
While Rupee was almost stable to dollar at 71.3, bond yields however fell a bit to 6.50 from 6.55 mark which is positive. The feeling is that the impact of budget will be forgotten in next couple of days. RBI’s 3 day MPC meeting is starting today and by Thursday the focus will shift to the last credit policy of this fiscal from the budget. Technically, Nifty has protected the 200dma of 11650 and now the journey will be towards the 100dma of 11830 and today we need to see if that level is crossed or not.
On the derivatives front, it was a positive day for both Futures and options market. There was close to 400 Cr buying by FIIs in the Futures market and that brought the Nifty Futures long positions to 21% from the low of 15% seen on budget day.
However the Futures are still in discount and that will take some more time to recover. In options market also the Nifty PCR recovered a bit to 0.90 from 0.81 mark seen at the beginning and we saw calls being bought in the ratio of 3:2. But on short side both puts and calls almost match each other. For the 6th expiry 11800 call added 9.3 lakh positions while 11700 call added 5.7 lakh positions and 12000 call still has the highest OI on call side. On put side 11500 put added 8.3 lakh positions and it has the highest OI making it a 11500-12000 expiry range for this series.
What is the Nifty call fr the day?
Yesterday was a small recovery day and Nifty managed to stay above 11700 mark at the end of the day. Today we will have a positive opening around 11720-11750 mark and that is the resistance level. Will there be an early morning selling that will bring Nifty back to below 11700 mark or can we see Nifty overcoming 11750 resistance and try to approach the 100dma of 11830 needs to be seen.
If 11750 is taken out easily, then we can expect a short covering rally that can take Nifty above 11800. So, the trade for the day is to go long at 11700-11750 mark with 11800-11830 as the target. 100dma will be touched before monetary policy day and that day, it might attempt to cross the 100dma and go towards 12000 mark.