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Market Trade Set-up 12th July

Finally we had a green opening and a green closing yesterday, though Nifty went into the red for few minutes in the 6 hours of trading yesterday. Nifty closed in that very predictable range of 11500-11600 on the weekly expiry day close to 11600 mark above 11580. Globally things are looking bright with everyone predicting a rate cut to happen this month itself and that has sent Dow Jones up 220 points.

Brent Crude is still higher trading between 66.6 to 67.2 per dollar range and this is primarily due to tropical storm converting into a category I Hurricane off the Mexico coast. Asia, however, is in the green zone today on the positive cues it got from the US with both Japan and Hong Kong markets up by 100 points each. 

On the domestic front, yesterday’s closing more or less means that downside is now protected at the 11470 mark which is the low for now. Nifty has taken support at 100dma which is now at 11510 and if the uptrend continues then 11750 which is the 20dma could be the resistance. So, this series has the legs to go up to 11750 mark.

Coming back to macro news, today IIP for May and CPI inflation for June will come out. Inflation is likely to come between 3.2 to 3.4% with services inflation expected to be around 4.1 to 4.3% and that would mean slowly the inflation and the services inflation are converging, which is a good thing. Also expected today is the IndusInd bank Q1 results around 1 PM and Infosys results after market hours. 

On the derivatives front, yesterday saw some more recovery on Nifty futures and the long positions in Nifty futures has come to 49% and shorts are at 51% so some recovery is happening there. The options market saw a lot more bullishness than futures and the Nifty put call ratio went to 1.25 from 0.85 and now after 2 days we have PCR above 1. 11500 put added 8 lakh positions yesterday for the 18th July expiry and it has the highest open interest followed by 11400 put at a distant 2nd.

On the call side 11700 call added 5.1 lakh positions and that has narrowly overtaken 11600 to emerge as the strike with highest open interest. 11600 call also added 2 lakh positions and this series will gravitate between 11500-11700. 

What is the Nifty call for the day?

Yesterday, you would have met the targets for the positions that you took on Tuesday or Wednesday and you would have exited Nifty in 11550-11600 zone. Today we will have a flat opening between 11560-11590 mark which is a resistance zone and if its crossed then 11630-11650 will be another resistance. On the downside 11520 might be the first support followed by that 11480 is a strong support. So, we are almost at the upper end of 11500-11630 range and Nifty has to break it to go higher.

So, the trade for the day is wait for a dip in Nifty to 11520-11550 mark and if 11520 holds then take a long position in that range with 11600-11620 as target. If Nifty breaks 11520 intraday, then you need not take any trade and wait till next week for further positions.