The 5th week and the expiry week begins for the August series which is 423 points down and if this series also ends in red, then its two consecutive months of red on Nifty, which is not a good sign. Will Nifty regain this 420 points in the next 4 trading sessions or not needs to be seen. The asking rate is high but if you watched Ben Stokes yesterday, nothing is impossible.
Globally we are in a very bad phase with US-China trade tensions reaching a point where it might consume both economies. Yuan fell to the lowest level of 7.14 today and on Friday Dow lost more than 630 points. Asian markets, which mainly derive their performance from China are in deep red, Hong Kong is down more than 800 points and Japan dow nearly 500 points. Brent crude also corrected to 58.2 dollars.
On the domestic front, it was Nirmala Sitharaman who will dominate the markets today. The FPI rollback and the rollback on the surcharge for super-rich on LTCG as well as short term gains will act as positive. Markets got a hint of it in the mid-morning and Nifty gained more than 200 points from the low of 10613 to close at 10829 mark.
So much of it is factored in on Friday itself, so how much of it is left out to play on a weak Monday morning needs to be seen. There are some other important triggers as well like the Jalan committee recommendations on financial reforms and the Q1 GDP figures that come on Friday. 11010 is the 20 dma and that is where the first resistance on the upside will come and we need to see how Nifty reacts once it touches this 11000 mark.
On the derivatives front, Friday saw a sudden jump in the long positions on the Nifty futures and the futures premium which was at a discount of 9 points has moved into the premium of 13 points and the overall long positions have touched 30% mark after a long time in this series.
In the options market, however, the Nifty put-call ratio is still sluggish and went up marginally from 0.96 to 1.02 by the time we closed trade. 10400 put and 10800 put added 2.4 lakh contracts each and for this week’s expiry 10500 put has the highest open interest followed by 11000 put. On the call side, 11000 call as of now has the highest open interest followed by 11100 and 11500 call. So, its a mess on options chart and it won’t give a clue where markets will move in the next few days.
What is the Nifty call for the day?
Today we will start with Nirmala Sitharaman effect and will open 50-60 points up around 10870-10890 mark and if you are carrying positions from Friday expecting a gap up, we have a small gap up and sell it as soon as the market opens.
This gap up has the potential to be sold into because every market in the world is trading in red, so it is tough for us to maintain green. But we cannot under-estimate the power of announcements and we have to see whether there will be buying at any dip and if it does then this market will convert into a buy on dips.
So, the strategy for the day is if 10850-10880 mark is maintained even after 10.30 then go and take a long position on Nifty with 10920-10970 band as the target. We have a chance of coming closer to 11000 mark if there is a global recovery during the course of the day. If Nifty falls below 10850 and doesn’t recover, then stay away for the day and see where it closes today.