Market Trade Setup 13th June
I had raised some concerns of Nifty not moving up in yesterday’s market set up and what we have seen is a 50 point plus cut on Nifty and we just managed to hold 11900 mark and today we have a different problem to deal with.
Christine Laggard is a name that we have been hearing for the last 10 plus years and she was the Finance minister of France during the 2008 economic crisis and went on to head the IMF and yesterday she came out and said there is a chance that World will go into recession by 2020 because of trade disputes triggered by the US. This triggered a fall in the market across the World as Europe and Asia is in deep red with Hong Kong down by 500 points and Japan nearly 200 points. Brent Crude also fell and is now exactly at 60 dollars.
Coming to domestics, India has something really positive to talk about and that is the IIP data. The IIP numbers for April 2019 come at a 6 month high of 3.4% from a negative growth seen last month. Manufacturing recovered and came at 2.8% and that is indeed good news. Capital goods at at 2.5%, consumer durables comes at 2.4% and FMCG goods comes at 5.2%. This is indeed a positive trigger. Added to this is good news from CPI inflation for May that comes at 3.05% vs 2.99% in April and 4.87% seen in May 2018.
The best news is Food inflation which is at 1.83% now indicating that the Agricultural sector is slowly coming out of problems. Also, the services inflation which was 5% till April, dropped to 4.2% in May, giving a room for another rate cut in August.
On the derivatives front, yesterday’s market movement was a mirror image of what we saw on Tuesday and Nifty is back to where it was by Tuesday morning. Today is the Nifty options expiry and the cues will be triggered from options where the Put call ratio fell to 1.33 from 1.46. 12000 call added 10 lakh positions yesterday and that means 11980-12000 is something which will almost be impossible to cross today.
11900 call added 9.1 lakh positions and 11950 call added 8.6 lakh positions, On the put side there was an unwinding of positions everywhere and 11900 put saw 5.8 lakh positions unwinding and 11950 call got 4.8 lakh positions unwinding. 11800 put still has the highest open interest indicating that 11820 might be the base for the expiry today.
What is the Nifty call for the day?
From the last 10 trading sessions, we were never in alignment with global factors. When World was positive we were having problems. Finally, when we got fantastic IIP and CPI inflation numbers, there are the growth fears gripping the World and all the markets are down. So, for today we need to decide whether we would act on the domestic positives and expiry factors or go down with global growth fears.
Today we are likely to open around 11880-11910 mark and we will have first support coming in at 11850 and second support at 11820. Watch out if these supports hold or not. If they hold then we might touch 11950 first and then 11980. It is almost impossible for Nifty to cross 11980 mark today. This is a no-trade day for you as there is a level of uncertainty and taking risk is not wise. Just observe where Nifty goes and get prepared for the second half of June trade starting from tomorrow.