Markets and News

Finally the expiry of the shortest but the bloodiest series has arrived. Nifty so far lost 673 points in this series making it the 3rd weakest series since the time F&O markets arrived in India. The worst was in January 2008 when Nifty lost 1400 points when Nifty started falling from 6000 and the next was in October 2008 when it finally came to halt at 2600. Even Demonetization month of Nov 2016 saw just 640 points down and let’s see if today there will be any recovery where Nifty scales above demonetization month’s worst or go down more than 700 points to make it the 3rd worst. FOMC minutes is out and economic projections seems to be very positive for US. That was taken negatively by equity and bonds in US. Dow ended more than 140 points down and bond yields went up to 2.92%.

Domestic Cues

On domestics things are no better for India as the MPC minutes had all the worries about inflation and slowing down of economy. The result is the new 2028 10 year has slipped further 7.75%. The GST collections for January comes little over 82,000 Crore which is a very worrying sign. December was 87,000 Cr and this tax collections are settling around 80-85,000 Cr which is not a good sign at all. The PNB worries are continuing and there seems to be no good news coming from anywhere. The only silver lining is Brent crude with has gone back to 64 dollars.

Derivatives Action

On the derivatives front, today is all about expiry and options hold the key. The 10450 and 10500 call saw the maximum open interest with 3.2 lakh and 3.1 lakh contracts respectively. 10400 call saw 14.7 lakh contracts unwinding as the Nifty stated moving towards 10400 towards the close. The 10450 call is at 12 rupees so 10462 is the roof for this series. On the put side 10300 put saw 10.6 lakh contracts build up at a premium of 10 rupees indicating 10290 as a strong support. 10350 put also saw 8.2 lakh contracts at 20 rupees premium. If Nifty opens below 10350 today you might see lot of unwinding here. All this has taken the nifty put call ratio to 1.18. So, the Nifty pivot is at 10370 with roof at 10460 and floor at 10290. It all depends on where the 3PM move comes today that decides whether expiry happens close to 10450 or 10300.
1. If Nifty opens below 10350 stays in between 10320 and 10350 and a 3PM move up means expiry will happen around 10380. This looks like a most probable scenario.
2. If Nifty open below 10350 goes below 10320, stays above 10300 and a 3PM move upwards means we will expire around 10350. This looks to me as the second probable. scenario.
3. The third probable scenario is Nifty opening below 10350 going, recovering later to go near 10400 and a downward 3PM move bringing it to 10350. There are other scenarios also where there could be a rapid fall and Nifty testing the 10290 support and I feel it might manage to hold it.

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

The global factors mean Nifty will open gap down around 10350 mark and what happens after that needs to be seen. I am not seeing much positivity today and it is better to hold on to your existing positions and wait and watch what happens.
On the bank Nifty, today we can see worst in the bank Nifty. It might open around 24800 levels and might test the 200dma of 24650 at the beginning itself. I would recommend going short as soon as it opens without wasting even a minute and keep the 200dma as target. If you were unable to do so, wait for my subsequent calls on twitter.