Market Trade Setup 5th March
We are back after a long weekend of 3 days and things have changed drastically from what they were on Friday and most of it has changed yesterday globally and that will have its effect initially on the market. Dow Jones has fallen by 200 points yesterday and today morning the Asian markets are looking in red. Yesterday there was a report that went public saying that China’s GDP in the next 2 years will be in the range of 6% to 6.5% vs 6.5% to 7% seen in the last two years. This is a definite fall and it will surely have its impact on the other markets. Japan saw a flat PMI for services for February and that kept Japan 130 points down and Hong Kong is down 150 points as of now.
On the domestic front, the big news again comes from the US and from President Trump who has told that Senate on Monday that he is intending to end the GSP or General system of Preferences to India. This means the zero import duty that is there for around 40 plus products that US imports from India will now attract import duties. These are majorly agricultural and meat products. That will have an impact on the Exports that India has on the US. On the domestic news, bad news coming from the auto sales for February, where almost all the two-wheeler and 4 wheeler companies have underperformed except TVS which showed a 3% growth and Tata motors that came flat. It will have some impact on the Auto stocks today.
On the derivatives front, there was a lot of buying that was seen on Friday in the options market than in the futures. There were 3 puts that were bought for every 2 calls and that was mostly hedge positions. The real action was on the short side where 3 puts were sold for every call and that brought the Nifty put-call ratio to 1.68 which is slightly on the higher side. For the March 7th expiry 10800 put added 6.3 lakh positions on Friday and now 10800 has the highest open interest of 14.5 lakh positions and on call side 11050 call added maximum open interest of 3.7 lakhs but 11000 call still has the highest open interest of 11.7 lakh positions. For the march monthly expiry 10900 put added highest open interest of 2.7 lakh positions and 10700 put still has the highest open interest and on call side 11000 call added maximum open interest of 3 lakh positions and it continues to have the maximum open interest for the monthly series also.
What is the Nifty call for the day?
Monday we were not trading but globally things were not fine and today also Asia is in mild red and considering all this, we will open down 60 points which means all the gains made on Friday will be erased. Nifty might open around 10790-10820 mark and 10750-10780 is the support levels. A gap down open means again we will have to deal with 20 day, 50 day and 200-day moving averages ranging from 10820-10860. If we take that out 10900 is the target that is easily achievable. So, I suggest going long if 10780 is not broken with 10880-10900 as the target either today or tomorrow. This is the beginning of the series so you can take some risk. But if Nifty falls below 10750-10780