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Market Setup 6th February

Yesterday was a narrow day with Nifty closing up 20 points higher and we are right now inside the big resistance zone of 10920-10980. Nifty has attempted to break this level at least 11 times in last 6 weeks to break this level only to go back and touch lower levels. Today we have again crawled back to this level and we need to see how the market behaves now. Globally things are looking very positive with Dow Jones gaining another 170 points yesterday on the back of some good Q4 earnings in the US. Most of the Asian markets are shut on the back of the lunar new year. Japan which is the only market trading is in green. Brent crude has dropped a bit and has gone to 62.1 dollars which could be a piece of good news for India. 

On the domestic front, the new RBI governor has postponed the monetary policy. Previously monetary policy committee would meet for 2 days, the first Tuesday and Wednesday of the month and would come up with the monetary policy on Wednesday afternoon. Now the monetary policy is going to meet for 3 days and the monetary policy announcement will happen on Thursday. The timings also changed from 2.30PM to 11.45AM. So, we will not have the monetary policy news. The Q3 results yesterday were below average for most of the stocks but Tech Mahindra came up with Fantastic number and that would remain as the good news. Today’s Q3 results include Adani Ports, Adani power, Archies, Cipla, Cummins India, JSW steel, Lupin, Sharp, Siemens India, TBZ Jewellers and Vodafone Idea. 

On the derivatives front, there was a lot of bullish action seen yesterday, especially in the options market. Futures market had an almost equal number of buys and sell but the Options market saw a lot of bullish action. There was a huge buying in calls and selling of puts which kept the Nifty put-call ratio almost constant at 1.68 vs 1.67 at the beginning of the day. 10900 put added 2.9 lakh contracts while 10700 put added 1.1 lakh contracts. 10700 put still continues to have the highest open interest. On the calls side 11300 call saw a lot of buying adding 1.7 lakh positions, 11200 call added 1.3 lakh positions and 11100 call added 1.1 lakh contracts. 11000 call still has highest open interest but 11200 is picking up a lot of open interest. 

What is the Nifty call for the day?

Yesterday I stopped you from taking any positions and predictably, Nifty was in a narrow range and closed mildly higher. Today we might have a slight gap up move and Nifty might open around 10940-10970 level which is the resistance zone and if Nifty crosses 10980 within first 10 minutes and stays above and crosses 11000 mark then only we can think that Nifty has broken the resistance. But the possibility of that happening is less. If Nifty corrects at 10980 or after touching 11000 and goes into the resistance zone again then there is no point trading today also. So, today also I advise you not to go for any trade and wait for Nifty to take out the resistance zone or fall below 10850 to look at a meaningful level to enter.