Monetary policy is now behind us, and though there is no rate cut NIFTY has not fallen but crossed 9900 and closed just below 9920. It reached the target of 9920 and so you would have exited all your positions by now. The monetary policy says all is well and we need to wait just some more time for the growth to come back. Even Prime minister in his speech has said that 21 reforms have been taken up so far and when so many things are happening are slowdown in some pockets is not worrying. He reminded Manmohan singh that it was during his regime that India got into Fragile 5. The Finance Minister says inflation at 3.3% is not a worrying game at all.
All this has made economy a political ping pong ball, which markets might not totally like.
So how was the trade set up yesterday?
Yesterday after the monetary policy, the NIFTY premium which was around 6 rupees before monetary policy went to 15 rupees by the end of the day. That shows many long positions were taken in NIFTY futures. The belief of celebrating a 10,000 Diwali is very much on cards. The Options data also confirms that. There were 5 calls bought was every call sold and for every put bought there were 6 puts sold.
This explains how active market is. 9900 put selling has started which is a good sign and 10,100 call shorting shows that NIFTY has the legs to cross 10,000 sometime around Diwali. The NIFTY put call ratio which was at 1.24 at the beginning of the day went to 1.29 by the time markets closed yesterday.
So what happens today?
I think today will be a breather day. NIFTY might open flat around 9900 levels and again 9920 will be a resistance. Even if that is taken out 9950 is a very strong resistance. And on the down side 9850 is a strong support zone. Today is the weekly expiry for Bank NIFTY. If you see the growth of Bank NIFTY is much lesser than NIFTY in last few trading sessions and today if Bank NIFTY makes an adverse move at 3PM it will surely have an impact on NIFTY. So the 9920-9950 is a fragile zone that might be touched just once and expect a flat day today with some red and some green on the NIFTY. If it closes above 9900 again it will be a good sign.
So, the trade today where 24100 put and 24300 call will be in action. Shorting them will make you rich on the first week of the month!