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Market Trade Setup 12th June

As we approach the midweek, confidence is building in the market as Nifty gained another 40 plus points yesterday and went above 11950 mark and closed at 11965. That presents the scenario, will we break 12000 today? Things are not as simple as they appear to be. When Nifty is rising, it’s not happening uniformly.

There are 6-7 stocks that are gaining 15% in the last one month while there are 5-6 stocks that lost more than 20% in the last one month. Globally things are not looking bright today as the US ended flat while Asian markets today are in red except Japan which is in mild green. The only positive is Brent crude which is now back to 61 dollars and trading at 61.4 dollars.

On the domestic front, there is some news that markets will react to. First is around 44 labour laws relating to production, maintenance, personnel policies is likely to merge into 4 categories and make them uniform. This will have some implications on labour policy in India and the market will watch it carefully.

Added to that is the IIP data for April and CPI inflation figures for May that will come after market hours today. IIP for the first month of this fiscal year is likely to be around zero which means practically no growth. Second is inflation which is likely to be around 3% which is slightly higher than 2.92% seen in the month of April. 

On the derivatives front, there was some disappointment as markets after starting well and touching 12000 mark came back below 11950 mark and lost the steam. There is some buying happening in futures and that is keeping the overall positions of long positions same as yesterday at 59%.

In the options market, the Nifty put-call ratio, however, went up to 1.49 from 1.36 mainly because of the demand for short puts taken at 11900 mark. 11900 put added 7 lakh positions followed by 11950 put at 5.2 lakh and 11850 put adding 3.9 lakh positions. On the call side 12200 and 12050 call added 2 lakh positions and 12100 call added 1.6 lakh positions. 

What is the Nifty call for the day?

Yesterday went exactly as per my prediction as Nifty faced resistance at 11980-12020 mark and came back to 11920 levels after touching 12000 mark. You would have exited your positions and booked the profits. Today also things look uncertain as Asia is in red, so we also might open bit down between 11950-11980 zone and again we will have a resistance coming in at 11980-12020. Will Nifty cross this or collapse from here needs to be seen.

Options data suggests that there is support for Nifty from 11820-11920 levels and resistance at 11980-12020 levels which can go up to 12080 levels. The trade for today is to allow Nifty to fall a bit and go long around 11880-11920 levels with a target of 11980 mark. One word of caution. If Nifty breaks 11880 mark then it can go as low as 11780 and that can upset many calculations for tomorrow’s expiry. So, keep all this in mind before taking any fresh positions.