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What a rally we saw in the last hour yesterday? Nifty just before 2.30 was struggling around 10900 not able to decide which way to go. And suddenly, it started breaking 10950,11000 and finally landed at 11050 within 35 minutes taking everybody by surprise. 11050 is a new reality now and how much of it is real, we will get to know in the next few days.

Globally things are looking fine, with risk on back into the global markets. Dow Jones went up and closed more than 350 points and that had some rub-off on the Asian markets. Coupled with that is the Q2 GDP of Japan which came at 1.8% vs expected 0.4% and that pushed Nikkei 150 points higher while other markets are mildly positive with Hong Kong up by 70 points. Brent crude fell a bit more and it’s trading at 57.4 dollars.

Coming to domestics, the big rally yesterday has brought Nifty back to the range of moving averages. We had broken 200dma couple of weeks ago and it was designed to be a bear market and now Nifty is back into the range and it is around 100 points and Nifty is now going to test 11160 which is the 200dma.

The reason for that is the acknowledgement of the Govt of the slowdown by calling on the industry experts and talking to them. FM met the representatives of the Auto sector yesterday and talked about taking concrete measures to bring this sector out of a slowdown. This could even go to the extent of making changes in GST wrt to the Auto sector. Today FM is meeting FIIs to talk about the taxation on FPI investments and if something good comes out we can see a rally continue.

On the derivatives front, yesterday’s rally was more of a major short covering on the back of the news of Govt having a relook at FPI taxation issue. Though FIIs are net sellers in the market the extent of selling has come down considerably. Yesterday’s weekly expiry created a new all-time record in terms of market cap and we have broken the previous record of 26.63 lakh crores and went up to 27.72 lakh crore yesterday.

The Nifty put call ratio rose sharply from 0.98 at the beginning of the day to 1.21 by the time we closed. We have a 3 day short series now expiring on 14th August and for that 10900 put has the highest open interest as it added 8.6 lakh positions yesterday taking the total open interest to 10.9 lakh. On the call side, 11100 call added 5.3 lakh positions and it has the highest open interest.

What is the Nifty call for the day?

Yesterday’s rally was unexpected and would have helped everyone with long positions as Nifty is now at 11030 mark. Today we are likely to open around 11030-11050 mark and we will have the 200dma first at 11160 and that will be a resistance that’s difficult for the Nifty to cross. Options data also suggests a 10900-11100 range for Nifty and that means we are at the upper end of the range.

So, the trade for today will be slightly tricky, wherein if 11000 holds in the morning then we can look at going long anywhere between 11020-11070 with 11120-11150 as the target to be achieved. The important news on FPI will come post-market close today as the meeting is scheduled at 3 PM. So, if you feel that Govt is going to say something positive then you can carry your positions to Tuesday.

If you don’t want risk, then close your positions for whatever profit and go home because we have a long weekend coming up and the next trading day is 13th August.