Firstly Happy Ugadi to you all and may this year of “Sarvari” give us the ability and strength to tide over the crisis that engulfed us and also bestow us with good health, wealth and happiness. A not so good time to welcome the New Year but the story of the day is the lockdown for 21 days.
Globally, things have taken a big U turn on the back of Fed’s unprecedented move to buy back bonds and asset back securities and that has led to a biggest single day gain in terms of points in last 150 years. Fed gained 2100 plus points and that has been passed on to the other markets also. One more good news is Europe for the first time has also showed some drop in the number of incremental cases and all this has made Asian markets open in green today up between 2 to 5%. Brent Crude is has also settled in 27-28 dollar range.
Domestically, a sea of uncertainty has engulfed us with PM Modi announcing a complete lockdown of the country for the next 21 days starting from today. That means all the economic activity will come to a grinding halt and only the essential services like food, health services, banking services will be open. That means roughly 60% of the economic activity will be halted and JP Morgan estimates that this could take away 2% of our GDP in Q4 and Q1 of the next fiscal.
This will have a huge impact on the EPS of different companies and that will start revealing when the Q4 and annual numbers start coming from mid of April. Technically, yesterday the 7500 level was held for Nifty and we need to see if we will be able to protect it today also. If we do, then a rebound might happen from this level.
On the derivatives front, yesterday was a good day for Nifty as we had a move past 8000 which was sold into but Nifty found support at 7500. Buying happened at that level and that moved the overall long positions in Nifty futures to 53%. From 14% at the beginning of the series we have come to 53% and the roll overs also are at 44% now.
On the options front, the Nifty PCR showed a slight increase to 1.08 from 1.03 levels seen at the beginning of the day. 9000 call now has the highest OI followed by 9500 call, 8500 call and 8000 call. So, the upper point of Nifty cant be predicted that easily. On the put side 7000 put has the highest open interest followed by 7500 put, which means that Nifty will try to protect the 7500 mark and in rarest situations 7000 should hold, making 7500-9000 as the expiry range for tomorrow.
What is the Nifty call for the day?
When the whole world is bullish, we are likely to open in red is what SGX Nifty indicates. As I write this SGX is 160 points down and that means we could open between 7650-7750 levels and if Nifty finds a base at 7500 then we can see a rebound happening from here. Its risky, I am going to suggest buying today.
In all probability, the time for buying has come and today if we close above 8000 or 8500 it means that we are on our way up. Dont get the feeling of missing out even if Nifty gains 1000 points today, be reminded that we are nearly 5000 points down from the top and finding the exact bottom is tough. But one thing is sure, if we close above 8000 then we are on our way up. You want be to part of every gain that market makes then this is the time.