Yesterday I was worried about the volatility but the amount of volatility that the market showed in terms of the fall that we had seen is unprecedented. From a high of above 10400 the Nifty had dropped more than 200 points.
The same happened to US markets last night and Dow moved more than 200 points down to close flat. The news of Gary Cohn who is a main economic strategist and advisor of the Trump administration resigning had its impact on the US markets. Cohn vehemently opposed some of the economic policies of Trump especially the recent import duties. That had its impact on the Asian markets also and they are also on a path to volatility. After falling down initially Asian markets have recovered a bit.
On domestics, Nifty has seen a 200 point fall in the last 90 minutes of trade yesterday to go to the low of 10215 which is lower than the 10279 seen in February series. That opens up the gates for Nifty now to touch the 200dma of 10130 levels. So this time the 10130 will be touched and that completes the 10% correction of the bull market. Bank Nifty has already touched its 200dma and has broken and closed below it which is a worrying sign. The Nirav Modi issue and the banking reforms are still a cause of worry and it remains to be seen how things shape up today. Apart from this there are no big fundamentals to be seen.
On the derivatives front, there was a huge sell off in the futures in the last 30 minutes and Nifty has ended in a discount of 26 points. Though it is due to the corrected value of Nifty but the real tick also showed a discounted value.
The long positions now are at 40% in this series which is abysmal. On the options front, the Nifty put call ratio slumped to 1.12 in yesterday’s trade and that shows how popular the calls are for shorting. Yesterday 10300 call saw 17.1 lakh contracts built up at 180 rupees premium, some of them shorts and with 10480 are the markers the risky traders wanted to eat that premium completely. The 10400 and 10500 calls are also active with 5.5 lakh and 6.6 lakh contracts respectively. 10200 put ha 4.2 lakh contracts built up at 140 rupees premium indicating that 10050 is the new floor for this series.
What is the Nifty and bank nifty call for the day?
Nifty might open flat today at 10250 levels and 10280 is the first resistance for it to overcome. Now any uptrend should be used as an opportunity to exit the long and wait for a fresh opportunity to re enter. If Nifty goes to 10350 by afternoon then there is hope and you can hold on to your positions but otherwise its better to exit than face more losses. You win some and you lose some and it is a difficult situation to be in. Bank Nifty is in even more horrible situation stuck at 24500 levels which is below its 200dma of 24750. This 200dma is a big resistance and its better to wait and watch what happens to find a cue. These are not good days and keep your money in your pockets than to burn them by trading risky trades.