What a way to end the week!!
Trump has done something that none of his predecessors could do or even imagine to do. Trump imposed 60 billion dollar worth sanctions in the form of imports hike. China retaliated by imposing sanctions on 28 import products amounting to 3 billion dollars. 60 billion vs 3 billion is no match but what triggered is a war between No. 1 and No. 2 economies of the World could impact everything and everywhere. Japan is worried as dollar is weakening which will impact Japanese exports and Japan majorly survives on US growth and anything that happens to US will impact Japan. Anything happens to Japan will trigger Euro zone and the 2008 like crisis might build again. Dow lost 700 points, Hong Kong lost 1000 points and whole of Asia is in a sea of red and Crude is now dangerously close to 70 dollars.
The domestics don’t matter on a day when global markets are so prominent. Rajya Sabha elections will happen today that will increase the BJP strength in RS at least by 10 seats. But that is insignificant as everyone knows that and today its technicals that market will be worried about. 10,000 is a psychologically a significant mark and market will want to protect it at any cost. There is a head and shoulders pattern that has formed on a 6 month Nifty chart and that shows breaking of 10,000 is certain. Whether it happens it today or over a period of one month needs to be seen. If 10,000 is broken on a medium term then 9600-9700 is a likely support. The Nifty has gone up over 60% from 6900 to 11,100 and we have just completed 10% correction and we might see more. So, 200dma is a old news now and we need to see what can act as support now.
On the derivatives front, the fall yesterday has triggered further short positions and now the long positions stand at just 40%. With market 60% short and with dip of 100 points coming, what would happen in Nifty futures need to be seen. The expiry is just 3 trading sessions away and now things are coming to a climax. The options data also suggest the same with puts and calls both seems to be playing equally. The put call ratio remained unchanged yesterday at 1.07. 10100 and 10200 call saw 5.5 lakh and 6.6 lakh contracts built while 9800 put saw 3.8 lakh contract built up. 10100 put saw 4.5 lakh contracts. 9800 put is at 10 rupees premium and now today the premium will go up sharply and today calls will be more attractive than puts especially at the beginning.
What is the Nifty and bank Nifty call for the day?
The global situation where Hong Kong is down 1000 points mean India will open more than 100 points gap down and unfortunately we dont have any open short positions. Nifty will open around 10,000 and wait till 10pm to see if 10,000 an hold. If not, then wait and watch. If nifty regains 10,000 and goes towards 10,050 then shorting it at 10,050 with 9950 as the target is something that you can do. But see when that 10020-10050 level is reached and short there. Do not short at the open around or below 10,000. Wait for a recovery and then short. If not wait and watch.
On Bank Nifty 24000 will be decisively taken out and 23800 is a open predicted. Bank Nifty is tough to predict as it is now dissociating with nifty in its trend. Short Bank Nifty only if it touches 24000 else wait and watch!