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What we saw yesterday would have shocked and unnerved many. Three back to back days of 100 plus point fall has left bulls in a state of shock and some are wondering if we are really going towards 11000 mark as few bears have suggested. The scariest thing is a bear telling that if we go to 10800 then Modi rally will be finished even before the results are out. We lost 500 points from 11850 to 11358 and another 500 point loss would take us to 10750 mark where the rally has started in February. Globally Trump is scaring Asia with his statements but the US ended flat last night while Asia is in deep red again with Hong Kong down 450 points and Japan down by nearly 300 points.

On domestics, we also have some local worries to take care of. The global worries are affecting giants like Reliance and yesterday Morgan Stanley downgraded RIL saying the petrochemical and polyester business will suffer due to poor global demand. That sent Reliance down 3.4% and with that Nifty had a big fall losing 1.2% in the afternoon. Also, there is doubt about the quality of our GDP numbers. When we revised our GDP base figures to 2011-12 we switched over to 6 lakh company data of MCA-21 from 2500 data taken from RBI. But now the NSSO survey came out saying that 45% of this 6 lakh companies dont exist and 15% of them are shell companies. Hence there is a doubt on the quality of GDP coming out of it. Govt is looking into it and will take some time before the issue is resolved.

On the derivatives front, there was huge selling to the tune of 1220 Cr by FIIs in derivatives, especially in Futures and that brought the Nifty Futures long positions to 65% from 68% at the beginning of the day. The options market also saw a huge demand for calls as call shorting was on full swing as the Nifty put call ratio dropped to 1.04 from 1.13. This is heavily oversold and we need to see what happens today. From 11600 the base now moved to 11400 as Nifty lost 140 points yesterday. 11300 has the next highest open interest for today’s expiry. On the call side 11400 call added 21.4 lakh positions, 11500 call added 18.1 lakh positions and 11500 still has the highest open interest and 11600 and 11400 calls have almost the same open interest. 

What is the Nifty call for the day?

Trump’s tough stand on China is breaking the back of Asia, while US markets stopped falling, Asia is on a continuous downward spiral. Will India also follow Asia or will India like the US, stop its fall today needs to seen. Last two days, I advised avoid trading on Nifty Futures but today, we might find support at 11300-11320 mark and this could be an attractive zone to go for a fresh long position with 11380-11420 as the target. We are likely to open around 11330-11360 mark and if we look at the options chart 11400 put and 11500 call has a highest open interest, so technically Nifty should move above 11400 and should expire between 11420-11450 mark and for that to happen we need to fight weak Asia. Maybe once Asia shuts at 2 PM we might start acting differently. Till then it is important to hold 11320-11350 range. Then only we can see Nifty going above 11400 mark and closing above that. Let’s hope the pain ends today.