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Market Trade Set-up 28th June

Start of the July series and the second half of 2019. It seems as if 2019 started just yesterday, time flies so fast. We had an election campaign, the election and a landslide win for BJP and we are now entering the second half of 2019 with a lot of stability.

World markets are looking at the G20 summit at Osaka and Dow Jones has closed flat down by 10 points on the expectations of Trump-Putin meeting today and Trump-Xi meeting tomorrow. Asia is also in a negative zone with all markets trading in the red. Japan is down 120 points and Hong Kong is down by 160 points and markets like Shanghai are down more than 0.5%. Brent crude is still hanging at 66.4 dollars while Rupee recovered to 69.06 yesterday.

Coming to domestics, it is the start of the July series and fundamentally there is some very important news that markets would react to and the top of the list is the Budget which will be presented next Friday. One day before we will have an annual economic report that will be presented and will be watched very closely. Apart from that, we have the usual IIP numbers for May and CPI inflation for June that would be released.

Monsoon will be another trigger as it is progressing very slow and has covered only 50% of the country till now. July is the wettest month and if it disappoints then there will be huge pressure on the Agricultural sector. The last trigger is the Q1 results for FY-20 that will come from 2nd week of July and that also will be watched very closely. 

Technically, July series has been very good historically. If we look at the last 3 July series all of them were big gainers gaining 350-550 points and that means this year also we can expect a good July series. That can happen if there is a post-budget rally and last time budget was presented in July was on 10th July 2014 and on the budget day it started at 7560 and by the end of the month went to 7790. That’s just 200 point gains.

For this series 11700 which is the 50dma will be a support and 11850 which is 20dma is still not taken out. It is important for Nifty to cross that to go above. The 100dma comes at 11420 and 200dma at 11100. On Fib front, 12100 should be resistance if 11850 is taken out on the upside and on the downside 11650 can act as a support for any fall. If that is taken out 11500 can come as a big support. 

On the derivatives front, yesterday’s expiry has created a new all-time record as predicted. The June 20th expiry clocked 26.3 lakh crore turnover and yesterday the turnover was at 26.55 lakh crore. Now we should be seeing new all-time highs more often. July series is starting with the highest rollovers for 2019 of 80% compared to the 3 month average of 73.4%.

The FII long exposure is at 62% which is a healthy thing to start with and the number of contracts for July series is at 1.98 Crore. The Nifty put-call ratio is starting on a mildly higher not at 1.51 mark. For the July 4th expiry 11800 put added 5.9 lakh contracts and has the highest open interest on the put side. On the call side, 12000 call added 8.7 lakh contracts and it has the highest open interest on the call side.

What is the Nifty call for the day?

Today is the start of the July series and the first day of the series has always been positive traditionally. There are mildly negative factors globally because of which Nifty can open on a flat zone around 11840-11870 zone. This is because yesterday’s 3 PM move happened from 11880 and it has to open at that level to correct. We need to see where the Nifty goes from there. Nifty is stuck in 11700-11850 range for a long time and if there is an intraday selling and Nifty comes below 11850 towards 11820 then 11780-11800 can act as a support.

So, the trade for the day is, if Nifty holds 11820-11850 range then you can take a long position there with a 40-60 point target below 11920 zones. This can happen today or can be carried to Monday. But it is important for the 11820-11850 zone to hold, then only take a long even if you have to take a position after 3 PM. If Nifty goes below 11820 then stay away.