Markets and News

Yesterday was the best day for Nifty in last 2 years. After March 2016 this was the best intraday rise we have seen where Nifty almost went up 2% on a single trading day. US markets after going up 400 points has taken a break and fell 150 points and that has put some dampener today on all the other markets. Asia is trading mixed with minor gains for some markets and minor red for some. The brent crude is settling below 65 dollars and the dollar index is still below 90 mark which is keeping rupee stable at 65 per dollar.

Domestic Cues

The biggest news however is coming from domestics where after 200 point uptick on Nifty we have got an equally good CPI and IIP numbers. CPI comes way below the expectations and it comes at 4.44% and everyone were expecting 4.7-4.8%. The food inflation is around 3.3% mark which is a great news but services inflation is still above 5% coming at 5.1%. Added to the good news is the IIP data for January coming at 7.5% and manufacturing surprising everyone at 8.7%. The capital goods went up 14.6% vs a negative growth last year and consumer durables showed a healthy 8% growth vs negative 2% growth last year. All this point to a good Q4 GDP growth which is a great news and we are on our way to close to 8% GDP in Q4.

Derivatives Action

On derivatives front, yesterday saw a monster rally leading to huge long positions getting created in derivatives market. For the first time in this series the market has moved from net short to net long. There are 55% long positions now compared to 47% at the beginning of the day yesterday.

Was yesterday the turning point in the market? We need to see today to confirm that. On the options front, there was a massive unwinding of call positions at 10300 and 10200 calls where 10.6 lakh and 8.2 lakh positions got unwound. The 10500 call also saw 6.4 lakh positions unwinding. 10600 call now has 15 lakh positions built and at 40 rupees premium market now believes 10640 is the roof to it which is also the 50dma, On the put side 10300 and 10400 put saw maximum positions built up of 18.7 lakh and 13.6 lakh positions respectively. 10300 put is at 65 rupees indicating at 10250 zone is the floor for the market for now. All this pushed the Nifty put call ratio to 1.27 levels from 1.14 at the beginning of the day.

What is the Nifty and bank nifty call for the day?

If you had taken a long position around 10350 level yesterday before Europe opens, you might be sitting on close to 70 point profit. You can keep a target of 10450 which is a 100dma for the Nifty and exit the positions as soon as 10450 is reached. Today it will open flat and 10450-10480 zone might be a resistance. If its overcome then 10500 will be touched, else it will spend time in that range and might close around that. So, wait for market to give a definite direction before taking any step.

On bank Nifty front, you have reached the target of 24650 yesterday and it might again open around that level today. 24780 is the 200dma and it might present as a resistance. Wait to see what bank nifty does with its 200dma. If its broken and if bank nifty stays above 24750 then its better to go long there with 25000 as the target. Otherwise wait and watch to see whether CPI numbers have the power to break the 200dma mark of bank nifty or not.