Nifty Trading Ideas

Market Trade Setup 13th May #Nifty

The Third week of May starts and we are in the second half of this May expiry and when we have a news-heavy month like this month, you can always expect a turnaround as dramatic as the downfall. This is purely my gut feeling and starting from today we can see the repair to the damage that the last two weeks have caused to Nifty. Whether am right or wrong, time will tell. Coming back to the present, US markets recovered 400 points from the lows and ended 140 points higher. Asia, however, is lower today still not able to come to terms with US-China trade tensions. Shanghai is down 1% and Hong Kong is down nearly 150 points. Brent crude is still at 70 mark trading at 70.7 dollars. 

On the domestic front, the 6th phase of polling for 59 seats got over yesterday and 64.3% polling was recorded as per the latest EC figures and final figures are yet to be published. This is slightly lower than last time with states like West Bengal and Delhi reporting a slight fall in voting percentages while Haryana, Jharkhand and UP maintained the same levels while polling went up in Bihar and MP. Delhi recorded 60.5% polling in 2019 vs 65.2% seen in 2014. All this needs to be analyzed and markets will starts reacting from midday. BJP holds 45 of those 59 seats and we need to see if BJP maintains that figure or not. Trends will be clear by midday today.

Continuing with domestics, IIP numbers were reported on Friday evening after the markets closed and we got a dismal -0.1% fall in March IIP. This means the IIP for 2018-19 is at 3.6% vs 4.4% seen in 2017-18. Manufacturing saw a big fall in March coming at -0.4% vs 5.7% seen in March previous year. The manufacturing figures for the entire year comes at 3.5% vs 4.6% seen in the previous year. Coming to specifics in manufacturing, Capital goods saw a fall of -8.7%, consumer durables -5.1% and FMCG comes at 0.3% vs 14.1% seen in the same month previous year. All this indicates a fall in consumption. The CPI inflation numbers for April will come today and that will be watched carefully now. 

On the derivatives front, the unabated selling by the FIIs is continuing and Friday saw 1250 Cr sell figure on Nifty futures and that brings the overall long positions in Nifty futures comes to 58% from 61% and the premium on Nifty shrunk from 85 points at the beginning of series to 22 points now. On the options side also the demand for the calls is more than puts and the Nifty put-call ratio is at 1.30 vs 1.38 seen at the beginning of the day on Friday. 11200 put added 4.9 lakh positions but 11000 put now has highest open interest followed closely by 11200 put. On call side, 11300 call added 6.1 lakh positions and 11500 call has the highest open interest followed by 11400, 11600 and 11700 calls. 

What is the Nifty call for the day?

Today morning we will have a flat to negative opening for Nifty due to uncertainty in Asia and then we might open around 11250-11280 mark and 11250 is the Friday low and that should act as a support. If this 11250 support doesn’t hold then 11180 is another level at which we have bigger support. On the upside, 11350-11380 is the resistance and if the market goes past 11320-11350 mark then the rebuilding process will start before going into next week where we will have the poll results. For today I would suggest going long at 11250-11280 mark with 11320-11350 as the target. If you already have positions taken on Friday, you can wait till Nifty touches 11380-11400 mark for you to exit. 

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