Market Trade Setup 9th January

Finally, we have good news to talk about and that comes from Donald Trump. His tweet that the talks with China are progressing very well is something that World has taken very seriously and started to celebrate. Last night Dow reacted to it positively and was up 250 points. The real story, however, lies in the Asian market screen with every market showing more than 1%. Japan is up 300 points, China is up 1.2%, Korea is up nearly 2% Hong Kong is up nearly 700 points or 2.5%. All this is showing a fantastic opening for us. But one point of worry is the Brent Crude prices which are now at 59.4 dollars and now we have Crude back again at 60 dollar mark. On top of that, the Rupee also has depreciated a bit yesterday and crossed and closed above 70 per dollar. 

On the domestic front, we have few fundamentals to deal with. The Constitutional amendment accommodating 10% reservations for EBCs was passed in Loksabha with an overwhelming majority but the big challenge for Govt today lies in Rajya Sabha where the Govt doesn’t have numbers and the regional parties may create a problem and prevent Govt from conducting business. Today is the last day for Winter session and if Rajya Sabha gets adjourned without passing the bill then it will be a defeat for the Govt. Apart from that, the Q3 results start off today and we have results coming from IndusInd bank and Delta Corp. The first day is always important and IndusInd numbers which will come in the afternoon will have impact on Nifty. Finally on the back of the mind the farm package will be looming large in the mind of the market. 

On the derivatives front, there was a positive movement on Index Futures with a positive Net buy from FIIs. There was 18.8 Cr turnover from the Futures space and even the options turnover was also very good at 6.3 lakh Crore. The total derivatives turnover is at 7.28 lakh crores and the put-call ratio also went up to 1.41 from 1.36 seen at the beginning of the day. 10700 put added 3.1 lakh contracts and 10400 put added 2.1 lakh contracts and the 10500 put still has the highest open interest at 39.5 lakh contracts and 10700 is also having good open interest. On the call side the surprise the narrowing gap between 11000 and 11500 call open interests. One needs to look at it carefully because till now we were looking at 11000 and 11200 as the roof for the markets. Some people have already started believing that 11500 also can be touched. 

What is the Nifty call for the day?

Yesterday I told you that if Nifty holds 10720 levels then it is better to take a long trade around 10750-10780 levels and if you have taken that with 10820-10850 as the target then you will achieve your targets right at the start itself. Nifty is likely to open gap up at around 10870-10900 zones and 10920 can be the resistance. So, exit the positions between 10870-10920 levels and you would have made handsome profits of more than 100 points. Observe the Nifty whether 10920 holds or if the sell-off brings Nifty below 10850 or not. Nifty should close above 10850 for it to break 10920 and cross 11000 in this series.