Market Trade Setup 15th April #Nifty

The shortest trading week of the year so far is here. This is a 3 day trading week with market shut on Wednesday due to Mahavir Jayanthi and on Friday due to Good Friday. In-between you have a weekly expiry on Thursday. So, today and tomorrow are the only normal trading days. The most important news that we would be looking at today is the IMD forecast for this year’s monsoon that will come around 3 PM. Skymet has given a disappointing figure now we will look at IMD to see what it says. If we look at the global markets, they are all celebrating due to strong macro data coming from China, especially the exports going up by 14% and imports coming down. Shanghai market up close to 2% and all the other markets like Taiwan, Korea, Singapore, Hong Kong and Japan all in deep green with Japan and Hong Kong both 300 points in green. US markets also added fuel on Friday with Dow closing close to 270 points up.
Coming to domestics, if the data took China and other Asian markets up, it is the same data that will put pressure on us and we are likely to start flat. The IIP data for February came after markets closed at 5.30pm and it was a big disappointment. IIP grew at just 0.1% vs 1.7% seen in January and this is the lowest in the last 20 months. Manufacturing has actually contracted by growing at -0.3% and thus the demand for electricity came down and it just saw a growth of 1.2%. Electricity usually grows more than 4-5% during the beginning of the summer months. The only saving grace was inflation data for March that came at 2.8% vs expected 3% and the food inflation finally came to positive at 0.3%. The best data is from services inflation which was down to 5% from 5.3% seen in February. On the Q4 results front, while TCS has met the target Infosys has disappointed with margins coming lower and growth guidance also is lower. So, we still have mixed Q4 results.
Coming to derivatives, there was some buying that happened on Friday as Nifty started to pick up in the afternoon due to weekly short covering. The overall long positions in Nifty futures now stand at 63%. Coming to the options market, there was demand for puts and that is visible in Nifty put-call ratio going up to 1.57 from 1.49 at the beginning of the day. 11600 put added maximum open interest of 8.1 lakh and 11500 put added 4.3 lakh positions and 11550 put 3.6 lakh positions. 11600 put still continues to have the highest open interest indicating that 11570 is a support level. On the call side, 11750 call added 2.6 lakh positions and 11800 call added 2.3 lakh positions while 12000 call added 1.9 lakh positions. 11700 call continues to have the highest open interest and a distant second is 12000 call. So, 11740 zones will be a strong resistance for this week’s expiry. But on the April monthly expiry, still 11500 put and 12000 call continues to have the highest open interest indicating that 12000 is possible this series. But 11800 is fast catching up, so it can act as a hurdle on the upside.
What is the Nifty call for the day?
A weak macro data and a disappointing Infosys data means we will start flat in the 11640-11660 levels and on the downside 11570-11580 might offer strong support and if the fall doesn’t happen then 11680-11700 might act as the first resistance. On Friday, we have taken the 11680 as a target and those targets were reached, and you would have exited your positions. Today is a day of uncertainty, so I would suggest not to take any positions today. But if there is a correction to 11570-11580 levels and Nifty stabilizes there then you can go long with 11650 as the target. Else, it’s better to wait and watch if 11680-11720 zone is taken out or not before deciding on further action.

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