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Market Trade Setup 7th August

Tuesday starts on a much calmer note than yesterday and things look more silent than how they were 24 hours ago. US markets are continuing to grow on the back of favorable macro economic data. Dow Jones was flat saw a mild up tick of 40 odd points to cross 25,500 levels. But NASDAQ continues its strong run with stocks like Facebook gaining more than 4%. The only sad news for India is from Indra Nooyi who is going to step down as the CEO of PepsiCo after serving the company for more than 12 years. For a generation of Indians she will remain as the guiding light and inspiration to look up to. Asia is green today with all the Asian markets showing flat to green trend.

Domestic Cues

On the domestic front, the dollar index is now coming into the play with Dollar index crossing 95.5 mark Rupee today is again in the danger of touching 69 per dollar. On the broader market, NSE reported a 11th consecutive day of positive advance-decline ratio which is happening for the first time since 2014 and that means things are steadying up in the non-nifty stocks. So, the worries that weak mid-caps might pull the Nifty down is receding soon. On the Crude front, Brent is now at 73.7 dollars and once it crosses 74 it will start hurting the crude dependant stocks.

Coming to the Q1 results front, things were mixed yesterday with Adani power and Adani ports both reporting average set of numbers. The banks were a big disappointment with bot Ujjivan bank and Dhanalaxmi bank reporting below par numbers. The biggest shock however has come from Syndicate bank which was a howler and a disaster, with the bank reporting a loss of 1,249 Cr.  Time has come for Govt to seriously consider either merging or shutting the bank. Today is an important day for Q1 with many Auto stocks like TVS, M&M and Motherson Sumi coming up with Q1 results.

Following are the Q1 results expected today.

1. Adani Enterprises

2. Alembic Chemicals

3. Bombay Dyeing

4. Dwarkesh sugars

5. Edelweiss

6. GSK Consumer

7. Hawkins Cooking

8. Inox Wind

9. Lovable Lingerie

10. Punjab National Bank

11. Thomas cook

12. Motherson Sumi

13. TVS Motors

14. Wonderla Holidays

15. M&M

Derivatives Action

On the derivatives front, there was a rapid fall in the long positions as Nifty failed to cross 11420 and many short positions were taken that kept the overall long positions to 59%. In the options market there were more calls than puts that came into selling and the Nifty put call ratio reduced to 1.70 from 1.73. 11400 put added 4.5 lakh contracts while 11500 call added 3.1 lakh contracts, 11600 call added 2.8 lakh, 11700 call added 1.4 lakh and 11800 call added 1.6 lakh contracts. Even the 12000 call got active where it added 1.7 lakh contracts.

What is the Nifty call for the day?

A mild Asia means a flat start to Nifty close to 11400 level and 11420-11440 is a strong resistance zone so the downside could be more than the upside. 11350 is a support and 11320 could act as a very strong support on the downside. Am expecting a flattish and less volatile Nifty today where closing above 11420 will be seen as a positive for it to move upwards. So, I advice rest today, wait and watch to see if Nifty can close above 11400-11420 levels.  If Nifty drops below 11350 below and stays there we can consider taking a long position with 11400-11420 as the target.