Markets and News

Trump effect seems to continue to affect US markets. If it was a threatening tweet last week that triggered a sell off, a tweet from him softening the tone seem to have paid off and Dow Jones went up over 300 points yesterday. Asia also is going up today led Hong Kong up 350 points.

The other Asian markets are also going green and India should also be on a upward trend at least to start with. Brent is up again and crossed 65 dollars and Dollar is settling at around 65.10 levels indicating some toughness for India’s international trade.

Domestic Cues

On the domestics things are slowly settling down after the BJP winning the 3 states. The focus is now back to Parliament where budget session is going on and opposition is giving some tough time to BJP especially in Rajyasabha. But other than that there are no worrying fundamentals and today could be all about technicals and global factors. The 100 day moving average is at 10450 levels and the 50 dma is now at 10630 and 200dma is at 10125. So these contours could slighty change the way Nifty would move today. 10450 if not crossed today could become a resistance to overcome.

Derivatives Action

On the derivatives front, there is a continuous selling happening on Nifty futures led by FIIs and that is taking its toll. The overall longs in the system is at 44% which is one of the lowest in this decade. But the positive from all this is, if there is any rally, all these shorts might go for cover and that could further push up Nifty.

On the options front 10400 call had 20.1 lakh contracts and I dont feel that all of them are short call, I think at least 8-9 lakh contracts would be long. 10700 call saw 9.7 lakh build up and 10600 call has 4.8 lakh contracts. 10700 call has 25 rupees premium so 10720 could be the final cap for this series. On the put side 10100 put saw 5.9 lakh contracts and 10200 put saw 4.6 lakh contracts built up and put call ratio is now at 1.21 down from 1.29 seen at the beginning of the day.

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

Global factors are prompting a gap up for Nifty and Nifty might open around 10400 levels and then 10420-10450 is the big resistance zone. Our positions are stuck at 10470 so overcoming this resistance is a must for Nifty to cross 10500 and go to 10600. That seems to be a long way. There could be lot of volatility today as there could be shorting at 10400-10420 levels which could take Nifty back to 10350 levels. I suggest you to wait patiently and see how the Nifty behaves rather than rushing for a position.

On bank nifty front, it is close to the 200dma of 24750 and today it might open up close to 25000 levels but at 25050 it might encounter some resistance due to 100dma placed there. If bank nifty takes that out then journey towards 25800 which is the 50dma is possible. My feeling is you can consider taking a fresh long position on bank nifty if it stays above 25100 till afternoon after europe opens. Else wait for tomorrow to see more cues emerge. Money in your pockets is more valuable than money wasted.