Not an ideal start to October, the month which begins the 3 month-long festive seasons beginning with Navratri and ending with Christmas and New Year. There was a mid-day scare on Tuesday and markets gave up nearly 250 points intraday, only to recover 120 plus points by the end of the trade and close just above the 11350 mark. Suddenly the two-day monster rally that took Nifty from 10700 to 11700 has given up nearly half of its gains.
Globally things look equally bad with Dow Jones losing more than 860 points in two trading sessions and it was majorly on the back of weak economic data and most was it was played out yesterday when we were not trading. Today, Asia is in the red zone today with Hong kong down 150 points and Japan down 450 points. Brent Crude is now below 58 dollar mark, trading at 57.6 dollars.
On the domestic front, there are some domestics that we have to react to today. First is the auto sales numbers of September, which has shown some signs of recovery month on month, but YoY, the fall continues. The interesting point to note is, two-wheelers have staged a recovery and companies like Hero have reported decent sales numbers. Even Royal Enfield sales have grown by 12.6% compared to August. But the bad news is continuing with Tata motors where the sales again halved.
The other news which is bit worrying is the GST collections for September which came at a 19 month low of 91,960 Cr. GST collections is the direct indicator of economic growth and the last month of Q2 also has not shown any growth as GST collections fell below August. On the technical front, the 100dma of 10410 is now going to be a resistance after the breach we saw on Tuesday.
On the derivatives front, today is the weekly options expiry and cues on Tuesday were not really great. There was selling in the futures market till 2.30 PM and buying after that kept the overall long positions at 37%. The options market is what is important today and there is bearishness written all over.
The Nifty PCR which went to 1.51 after the rally, has now dropped to 0.96 from 1.04 seen at the beginning of the day. 11400 put shed 9 lakh positions while 11450 put and 11500 put shed 6.3 lakh positions and 5.9 lakh positions respectively. On the put side, 11000 and 11300 put have the highest open interest. On the call side, 11600 call added 6.6 lakh positions while 11400 call added 6.2 lakh positions and 11500 call added 5.8 lakh positions. 11600 call, however, has the highest open interest for today’s expiry.
What is the Nifty call for the day?
After a break of one day, the trading resumes today, and there was a lot of selling that was seen globally yesterday. The result is we are likely to open gap down again below 11300 mark and the gains we got in the last hour of trade will be more or less erased. The 11250 mark which also coincides with 200dma will come as strong support which should hold. This is the mark we recovered from on Tuesday also.
On the upside 10400 will be a strong resistance which is the 100dma. Today is also the options weekly expiry and there could be a lot of volatility because of that. So, my suggestion would be to stay away from the market and see which way it goes and where it closes. Once things settle, we can resume trade tomorrow or next week.