Corona Virus is the buzz word and what should have been a pre budget rally, is turning out to be a sell off. Yesterday, the market broke the crucial 50 dma and that means now we are in a territory where if buying doesnt happen then very soon we will be below 12000 mark. This was the same point where Nifty was when budget was presented in July.
Yesterday all the global markets sold big time on Corona virus scare, European markets sold off between 2 to 3% and Dow Jones also sold off 450 plus points last night. Most of the Asian markets that were shut yesterday due to Chinese New year, opened today and they are all trading 3% down. China and Hong Kong are still shut and now the entire Wuhan city which as 5 million population is totally cut off. Brent crude is also down and trading at 59 dollars.
Domestically, in the battle of Corona vs ICICI earnings it was Corona virus that won hands down. There was an attempt early morning to cross 12200 mark but that was accompanied by ferocious selling that first brought Nifty to 12150 mark and then went on to test 12100 mark going below the 50dma of 12120. Today there are some more good news from Q3 earnings but how much of it will be factored in needs to be seen.
HDFC has come up with amazing numbers, followed by Indigo which has more than doubled its PAT from 100 plus crore to 250 Cr this quarter. Plus Govt of India also came up with a renewed Air India 100% stake sale deal where Govt is willing to absorb 2/3rds of the debt leaving only 1/3rd to the new buyer. All this should take Nifty up and if we get a support around 12050 mark and regain 12120 intraday and close above, then we are out way again.
On the derivatives front, yesterday was a fatal blow seen in Nifty futures, coming at the fag end of the January series. There was close to 2,200 Cr selling seen in Futures and the premium was down from 20 points to just 6 points and the overall long positions have now hit the 40% mark, lowest in the series. Rollovers in Nifty is seen at 19% yesterday.
On the options front, the Nifty PCR also suffered a huge loss as call were written at every strike and positions in puts were unwound. Nifty PCR is now at 1.11 down from 1.42 seen at the beginning of the day. 12200 put lost 10.1 lakh positions and that makes 12000 put the strike with highest OI. On the call side 12200 call added a record 30 lakh positions, all shorts and 12200 is a firm resistance now. 12300 call also added 11.2 lakh positions but the range for expiry is 12000-12200 now.
What is the Nifty call for the day?
Yesterday was a day of big fall where Nify lost 130 points on the corona virus scare and today also globally, every market is falling and we have some hope from the positive news of Air India and good Q3 earnings from HDFC and Indigo Airlines. Are we going to bounce back from 12050 mark and conquer the 50dma of 12120 or are we also going to follow the global markets and go to 12000 needs to be seen. 12000 is an important level and if that breaks we are staring at 11800 mark before budget. But if we hold 12050 and go up today, then we can still see 12300 mark on the budget day.
So, today is the day of uncertainty and I advise to stay out of trading and see which way Nifty is going to settle down before taking any further positions in this uncertain markets.