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Market Trade Set-up 11th July

Just when we were thinking that Nifty started to recover, we lost 100 points from the highs of 11590 yesterday and closed just below 11500 mark bringing us close to 100dma as well as the long-standing support of 11500. We are now at the midpoint of 12100 high made a month ago as well as the 11000 low from which we bounced back. If we pick up from here, we will touch 12000 again, if not 11100 is the support.

There was a hope rally yesterday as Jerome Powell gave a big hint that there will be a rate cut on 29th July policy. It brought huge relief for US and Dow closed more than 75 points high and S&P for the first time ever has crossed 3000 mark. Asia is also celebrating the news of rate cut possibility and all the Asian markets are in green, especially Hong Kong up 300 points and Japan up 100 points. 

Coming to domestics, today is the weekly expiry for us and we have the global positive sentiment which can support us to go higher but the crude overnight has sharply risen to 67.2 dollars, on the hurricane that developed on the Gulf of Mexico. Otherwise, it’s just the technicals that will affect the market. Yesterday we protected the 100dma of 11470 for the 2nd time but the sentiment seems to be more sell on the rally, which means any rally in the range of 11550-11600 is seeing heavy selling.

What we need is fundamental to counter this and today we have the US fed fundamental and we need to see how much seriously it will be taken. I feel if we cross 11620 this morning then the market will move towards 11650-11680 range and that will mean we have broken the 11550-11600 range. If it has to happen, today is the best day for that.  

On the derivatives front, there was a little buying in Nifty futures yesterday to the tune of 100 Cr and much of this happened in the afternoon. This means that there is some confidence coming back but the overall long positions still remain at 48% vs 47% at the beginning of the day.

The options market, however, is seeing a lot of bearishness and Nifty put-call ratio fell again to 0.85 from 0.91 level seen at the beginning of the day. 11600 call added 18 lakh positions making it the highest open interest for today’s expiry. 11700 call is in 2nd place with 5 lakh positions lesser than 11600. On the put side, 11400 put is ahead of 11500 put by a mere 2000 contracts and that is because 11500 put yesterday lost 4.6 lakh contracts in open interest while 11400 open interest almost remained intact. 

What is the Nifty call for the day?

After many days of negative opening, today we might see some green on the screen finally. For the first time in a week, we will have a good positive opening between 11530-11560 range and we need to see whether the 11570-11600 mark will be sold into or not. If selling happens in that range then we will again go to 11480-11510 range and until we break 11620 decisively, the upward movement is not possible. Yesterday, you would have taken a long position around 11480-11500 mark and today you will meet the target of 11550-11580 for that position.

So, as soon as you reach the target exit and stay aside. Today is the weekly expiry and we might see some volatility in the afternoon where Nifty might try to cross 11600 and we need to see if that happens or not. So, today is a wait and watch day and hope that the market closes above 11600.