Markets and News

I am starting the expiry week first day Market Setup from the holy city of Varanasi. The global cues are extremely weak with Dow closing more than 400 points in red which means it has lost almost 6% in last one week. It is trading at the lowest level in last 5 months like Nifty. The Asian markets also started in red with the trade fears intensifying with China threatening to impose more sanctions on the USA products. The Crude also went to 2018 highest level of 70.5 dollars which could impact a lot of emerging economies.

Domestic Cues

On the Domestic front this week is a three fab trading week with holidays coming on Thursday and Friday and expiry advanced to Wednesday. That makes the market move completely on technicals. The Nifty after breaking 200dma and closing below 10,000 mark has a support only at 9650 levels with 9800 offering an intermediate support. We could hold this series at 9800 if nothing happens globally and 10,150 will be the highest.

Derivatives Action

On Derivatives front there has been a heavy selling on Friday with Nifty breaking 10000 mark. Lot of short positions were created in futures market and overall long position is just 37% which is another lowest in 2018. The options also saw lot of call positions in demand which brought the put call ratio for the first time below 1 at 0.98 from the 1.07 levels seen on the beginning of Friday. 10,100 call and 10,000 call saw an extraordinary build up of positions of 10.6 lakh contacts for 10,100 and 27.4lakh contracts for 10,000 call which is multi series highest. That means Nifty will find lot of resistance at 10,120 to 10,140 levels as these contracts were shorted for the premium of 120-140 points. Now the premium is at 65₹ after losing 90 points. On the put side 10,100 and 10,200 puts saw maximum unwinding of positions due to fall in Nifty. 10,100 put saw 19.2 lakh contracts unwounded and 10,200 put saw 12.5 lakh contract unwound. 9,900 put has the maximum open interest of 14.4 lakh contract and at 35 rupees premium 9,860 might be a support.

What is the trade setup for Nifty and Bank Nifty?

Nifty will open flat around 10,000 level and take the first hour to observe which way it is going. If Nifty goes up and stays between 10,020 and 10,050 then it is better to wait and watch. If the Nifty is below 10,020 then you can go for shorting the 10,050 call which will be around 60-65₹ premium. If the Nifty stays below 10,000 and is moving towards 9950 then wait for my Twitter update on call to take.

Bank Nifty will be more negative then Nifty so is it below 23,800 then shorting 23,700 call at 200₹ premium is a wise strategy.