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Market Trade Setup 13th March #NIFTY

In no time, suddenly you saw 11300 on the screen and we have closed at the highest level since last 6 months. On 18th September 2018 Nifty closed at 11278 and we have crossed that. We started this month at 10863 and from there the growth is 463 points. All this has to take a pause as nothing can move up forever and today might be one such day. Yesterday Boeing contributed 150 points of the fall in Dow Jones as the stock fell by 6%. That made Dow to lose 92 points and if Boeing was not contributing 150 points on the downside Dow would have closed positive. The Asian markets, however, are in deep red with Japan down 300 points and Hong Kong almost down 200 points mainly on the correction. Brent Crude is still holding on to that 64-67 dollar mark trading at 66.7 dollars.

Coming to domestics, the news is also not that great as we saw a marginal increase in inflation and a bad IIP figure. I had talked about 1.8 to 2.0% but it came lower to 1.7% for January 2019. This was mainly due to manufacturing coming at just 1.3%. The capital goods which is an indicator for future demand actually contracted by growing at -3.8% and consumer durables also came lower at 1.8%. The inflation has also hardened a bit and came at 2.57% for February vs 2% seen in January. The food inflation is still negative at -0.66% but it is better than -2.4% seen in January. Vegetables were cheaper by 7.7% in February while meat and fish prices went up by 6%. Though 2.57% is not a bad figure but market will not like the IIP figures that came in.

On the derivatives front, yesterday was a party day for bulls as everything was moving their way. From afternoon there was relentless buying in Nifty futures and 3 long positions were taken in Nifty futures for every short. With this, the long positions in Nifty now stands at 55%. The volumes surged to 1.55 lakh and turnover was at 10.17 lakh crores indicating that we might cloak 20 lakh crore this week on expiry day. On options front also there was a huge demand for puts as 50 puts were sold for every short call. On the long side, 9 calls were bought for every put and the result is we have a put-call ratio in an overheated zone at 1.81. This also indicates that there will be some cooling off and correction required.

Coming to open interest at different strikes, 11200, 11250 and 11300 puts saw huge volumes yesterday at 14.8 lakh, 14.1 lakh and 10.1 lakh positions. On the call side 11350 added 6.2 lakh positions, 11500 call added 5.4 lakh positions and 11400 call added 5.2 lakh positions. For this series, the highest open interest on the call side is at 11300 now and on the put side, it is at 11000. So, this means today and tomorrow the chances of the downside are more than upside. However, 11200 has the second highest open interest indicating that support might come at this level. For the monthly series however 11000 put again has the highest open interest on the downside and 11400 has the highest open interest on the call side with 11500 call having the second highest open interest.

What is the Nifty call for the day?

A soft Asia and Boeing worries and the bad IIP data means we will open below 11300 mark today probably at 11270-11290 levels and first support will come at 11240 levels and then at 11180-11200 levels. There are some negative news on Brexit front also, so it is advised that you should be bit careful today in your trades. Last two days have given you plenty of profits and today is the day where you might want to take a small break and see how things go. But if you really want to trade then look for Nifty holding 11210-11240 mark in the morning and you can go long with 50 point target today or tomorrow. If 10210 is not held then better to stay away from trading for today. 

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