Trade Setup

Yesterday we have seen a drop but not good enough to make any big profits. The short position hence should be ejected immediately. Official announcement was made yesterday on who will be the next Fed chairman. President Trump announced Jerome Powell as the next Fed chairman. He is seen as a dovish man. Interestingly when Yellen succeeded Ben Bernanke she was seen more dovish than Ben. What needs to be seen is what will happen in December. If the interest rates go up in US that will have a big impact on emerging economies including India. So Powell’s announcement as Fed chairman might not be a really great news for India or Asia. The result is Asia is trading mixed and India also might open the same way.

Futures and Options!

The derivatives data suggests a positive day today as yesterday saw the NIFTY premium surge from 23 rupees to 29 rupees. In a falling to flat market an increasing premium is an indicator of upcoming bullishness. The options data also started showing positivity with put selling happening at 10400 and 10300 levels. 10400 put saw a build up of 96,000 contracts and 10300 put saw 78,000 contracts being built up. That makes 10240 as a strong base for this series. On the call side 10500 and 10600 calls saw maximum open interest. 10600 call saw lot of shorting and created 83000 contracts there. The put call ratio went up slightly to 1.52 from 1.50. That means 10500 call that saw 1.21 lakh contracts actually saw a lot of buying. That’s surprising which means 10650-10700 is a possibility sometime during this series.

So what is the NIFTY strategy for the day?

It’s a Friday and a rest day with minimum profits. The flat opening at 10420 level should be seen as a buying opportunity with a target of 10460-10470 levels intraday. NIFTY will encounter a resistance here and the support continues to be there at 10400-10410 levels. If this is taken out then exit longs and wait for the next opportunity to re enter.

Q2 results today

1. Edelweiss
2. Godrej Agro
3. Godrej Properties
4. HINDALCO
5. Parle
6. Power Finance Corp
7. Punjab National Bank
8. Tata Power
9. Titan
10. Union bank