The march of Nifty stalled at 20 and 50dma web. After opening exactly in the range of 12120-12140, it went all the way to 12150 and couldn’t cross this range, sold off after the credit policy and closed within this range of 12120-12140. Resistances are tough to cross and even fundamental news of a good monetary policy also didn’t help. This could be due to the 500 points we gained in the last 4 sessions.
Added to this is the Coronavirus scare where close to 60 people in a cruise ship were found to be positive for the Virus and the entire ship is quarantined now. Till now the epidemic spread to 31,000 people and the death toll crossed 600 mark. This has put pressure on all Asian markets and Hong Kong is down 200 points and Japan down 50 points. Brent Crude settled at 65 dollar mark.
On the domestic front, the monetary policy was as expected and in fact good. Shaktikanta Das is learning fast and RBI came up with quarter wise GDP growth for the next three quarters and by the second half of 2020 RBI projects the GDP to cross 6% and the inflation remaining under 5%. On the benchmark rates, the Repo, Reverse repo and bank rates were kept constant at 5.15%, 4.90% and 5.4% respectively.
The big plus of the policy was to make the long term loans cheaper by tweaking the CRR and this move was appreciated by all. On the Q3 front, many companies have come up with their numbers and so far they look satisfactory and now we are almost at the end of the Q3 season. Technically, the 20 and 50 dma are the only barriers for the market and once its overcome 12300 is a possibility.
On the derivatives front, yesterday saw some mild buying of 200 Cr in the futures market but the overall long positions still remained at 18% and Nifty futures premium still remained in the discount zone of 1 point. On the options front, yesterday was Nifty and Bank Nifty weekly expiry and we had a turnover of 35.4 lakh crore which is very high indeed. The Nifty put call ratio jumped to 1.48 for the 13th February expiry from 1.39 level at which 6th Feb closed.
12100 put added 9.7 lakh positions for 13th expiry, while 12000 put added 6.8 lakh positions and 11800 put added 5.7 lakh positions. 12000 put has the highest OI on the put side, while on the call side 12200 call added 8.3 lakh positions while 12400 call added 6.4 lakh positions and 12200 has the highest OI making 12000-12200 the range for this expiry as on today.
What is the Nifty call for the day?
Yesterday, as predicted Nifty was in the range of 12050-12150 even though there were monetary policy and expiry related volatility and today could be an even narrower day. Asia is worried by the fresh bout of Corona virus in China and due to that we might open around where we closed yesterday in the 12120-12140 range and yesterday’s 12150 level would be a big resistance.
On the downside 12080 and 12050 might offer support. So, the trade for the day is to take a long position on the dip anywhere below 12100 mark with 12150 as the target. If 12150 is taken out today then we can expect 12300 to be reached next week and we need to see whether that happens or not. If it ends below 12100 then some more consolidation is in store.