Tag Archives: Bank Nifty

Market Trade Setup 5th December #NIFTY

Market Setup 5th December

There was a huge scare that we woke up to. Dow Jones has plunged 800 points overnight. This is the worst fall for Dow Jones since 2011. This is coming on the back of the global growth scare. Added to that is the doubts that US-China trade truce might not last for long.

The main point is, why did Dow lose 800 points? The answer came from the flattening of the Yield curves of 2 yr, 5 yr and 10 yr bonds where the interest rates have narrowed so much that 5 yr yield fell below the 2 yr yield curve for the first time since 2007 and the spread between 2 year and 10 yr yield curves went to the narrowest of 11 bps for the first time in 10 years. This according to Rabo bank is the signs of the recession coming as soon as June 2020. All the Asian markets also are trading in negative on the back of this terrible news coming from the US.

On the domestics front, we have a different fundamental to deal with and that is going to the RBI credit policy which is going to come at 2.30pm today. Three factors are important here. First is what will happen to CRR, SLR and Repo rates. According to me, RBI will not touch CRR and Repo which are at 4% and 6.5% now but they can actually look at reducing the SLR, which is the money that can be parked by banks in Govt securities. This is at 19.5% now and RBI might bring it down to 18.5% to allow more liquidity in the market, which is what Govt wants now. Second is the tone of the policy, which might be changed to “neutral” from “calibrated tightening” and RBI might sound dovish in it statement. The Third is the inflation and growth projections. RBI might bring down its inflation forecast by upto 50 bps which is good and the growth forecast from 7.5% to 7.4%. 

On the derivatives front, there has been a lot of action seen in the Futures market both on the long side as well as short side. The options market has the Nifty put call ratio going up to 1.70 from 1.68. 10800 put added 2.8 lakh positions while 10600 put added 2.2 lakh positions. Still 10000 put continues to have the highest open interest while 10500 put is also picking up the open interest. On the call side 10900 call added 76,000 open interest and 11000 call still continues to have the highest open interest of 27.2 lakh and 11200 is also slowly picking up in the open interest. 

What is the Nifty call for the day?

The global growth scare will make the Nifty open today in the 10810-10840 range and what happens further needs to be seen. If you have taken positions yesterday around 10840 odd levels then wait for 10900 to be reached before closing positions. If you have not taken any positions, then wait for Nifty to stabilize at 10780 zone and go long with a 50 point target. Today’s monetary policy will add some volatility and use that to exit positions not enter. 

Market Trade Setup 4th December #NIFTY

Market Setup 4th December

If you have not taken any long position on Nifty, as it went below 10880 levels, you would have been saved from going into red again. You could have gone short yesterday at open but that is for bears and usually, I don’t give such advice. Nifty ended almost at the same point it ended on Friday so you are at the same place where you were last week. US markets continued its rally as Dow gained another 300 points but today all the Asian markets are in red. Hong Kong is down nearly 100 points and Japan id down more than 150 points and after a big rally yesterday today its a technical profit taking that is playing out in Asia.

Coming to Domestics, today is the day where we will react to global factors and technicals, waiting for the fundamental events starting from tomorrow. RBI credit policy is something that everyone will look for but for today, it’s the technicals and Crude what will move the market. Crude is exactly where it was yesterday at 62.3 dollars and we have seen how rupee depreciated and crossed 70 mark again on the back of Crude rising again. Today, the Dollar index has stabilized a bit so Rupee would also like to strengthen today and bond yields will also remain flat as the big policy decision is awaited tomorrow. 

On the derivatives front, there was a neutral action in the Futures market where the equal number of long and short positions that were taken. Due to this, the long positions remained constant at 52% but the Nifty futures premium grew from 20 points to 40 points at the end of the day which is a positive sign in the coming days. On the options front, the Nifty put-call ratio remained almost flat at 1.68 compared to 1.69 at the beginning of the day. There was a bit of call shorting and 3 calls were shorted for every 2 short puts. 11000 put added maximum open interest of 2.5 lakh contracts and 10500 put added 3.1 lakh contracts. This is bit strange and the only reason that explains this is some people are assuming a BJP victory in all the 3 states which can take Nifty past 11000 and expire above that. 

What is the Nifty call for the day?

Expect the Nifty to open at 10850-10880 levels and that is a support zone. If it is taken out then 10800-10820 might come as another support zone. On the upside, 10920-10940 is the resistance and only if it is taken out then the Nifty will move upwards. If you have listened to my advice you would not be holding a long as Nifty went below 10880 yesterday to 10840 levels. Today, I suggest you to go for long if Nifty finds support either at 10850 or at 10820 with 50 points as the target. This target can be achieved either today or tomorrow.

Market Trade Setup 3rd December #Nifty

Market Setup 3rd December

The last month of the year kick starts in a mixed way. There is a huge cheer in the global markets as the outcome of G20 summit is heartening for many. The US and China have met and have discussed trade and have announced a truce for 90 days on any further increase in trade tariffs. so, the whole world cheered up for the result and Dow Jones anticipating that has ended 200 points in the green. Today morning the Asian markets are in green with all of them up more than 1%. Infact China is up almost 3% and Hong Kong is up more than 700 points, China is up nearly 350 points. The only negative is increase in Brent crude prices which went up from 58.8 dollars to 62.1 dollars. This is also on the trade tensions reducing between US and China.

On the domestic front, the GDP number comes at 7.1% vs my forecast of 7.2-7.4% and the market expectations of 7.4%. This is a disappointment for sure as the services sector growth has got stuck. Now we are worried about the growth for Q3 where the situations looks almost same as Q2. The auto sales numbers that came on Saturday has confirmed that. There was a 20% fall in the heavy commercial vehicle sales and even the passenger and 2 wheeler segment has seen a fall. All of them had a negative growth. Added to this is the November month GST collections that comes at 97,000 Crore vs the October GST collections of 1 lakh crore. So, this dip in GST collections is also not a good sign. There are some important cues to watch this week. RBI monetary policy is out on 5th, OPEC will meet to discuss crude production on 6th and we have Exit poll results coming on 7th. So these are some domestic cues we can look at this week.

On the derivatives front, there has been some positive to mixed action in Futures and options market on Friday. The Nifty futures long positions which were at 51% in the morning went up to 52% by the end of the day. There were some longs taken after the market corrected. On the options market however the sentiment was bit bearish with Nifty put call ratio falling to 1.69 from 1.74. There was bearishness both on the long and as well as short side. 2 long puts were taken for every long call and 3 short calls were taken for every 2 short puts. 10000 put added a huge open interest of 6.5 lakh after 10700 put that added 6.7 lakh positions. 10000 put now has overtaken 10500 put for the maximum open interest. On the call side 11000 call has the maximum open interest and it added 1.7 lakh positions. 

What is the Nifty call for the day?

Asia is on fire today and that means we will open gap up above 10900 level, probably at 10910-10930 levels and there it will encounter a resistance which is at 10930-10960 zone. So, there is a chance that Nifty will correct from there and might find support at 10850-10880 zone. If 10850 doesn’t hold then it is a bad news and if 10880 level holds then I would suggest you to go long at 10880 level with 10930-10950 as the target for the next 2 days. We are at a congestion zone and getting upside is not that easy. So, our targets should be realistic giving some time for them to be met.

Market Trade Setup 30th November #NIFTY

Market Trade Setup 30th November

December series has finally started and we have started on a fantastic note which pushed Nifty up 743 points making it the best series in 32 months!!! Though on the last day my call ended on a losing note am not complaining as we have made a lot of money and Nifty also went up. Winning and losing is a part of the game but its the trend that matters most. December is starting with G 20 summit, where Trump and Xi-Ping are meeting and this US-China trade talks will be the big focus. Everyone is eagerly waiting for this and our PM, Modi is also there and likely to hold talks with the US and Chinese presidents. The US closed flat on this news and today Asia is also trading mixed to flat anticipating which way the trade talks go in G-20 meeting in Argentina. 

On the domestic note, today is also the day when the GDP figures for the Q2 will be out. Though the results will come after the market hours at 5.30, market will have some anticipation as to where the number might come. The IIP numbers for Q2 came in at 6.5%, 4.7%, 4.5% in the three months which is almost same as Q1 months but the major factor is the corporate results of Q2 that came in almost flat at 2% compared to 12% seen in Q1. This according to me could be the crucial factor. Q1 has seen a GDP of 8.2% but matching that in Q2 is going to be tough. Q1 figure of 8.2% came from lower base of 5.6% seen in Q1 of last fiscal. The Q2 figure in last fiscal was 6.3% and that makes the base bit tougher so considering all these factors I can expect a GDP of 7.2-7.5% and agriculture GDP is going to be crucial and that could change things. 

What to expect from the December series?

Finally December series is here and last three december series have been positive with gains ranging from 1% to 2.5% and we had a 7% gain in November and will December also follow it up with same gain or not needs to be seen. The crucial factor is the election results on December 11th. Like Diwali which came at the mid of this series, election results also are coming at the mid point. I would thus like to divide this series pre results and post result part. If there is an uptrend till 11th then we might see some sell-off post the series. 

10500 put and 11000 call have the highest open interest to start with, but 11500 also has a good amount of open interest and so does 11200. So, the first part of the series if there is a rally can go to 11200 or even 11500 levels. Similarly, if there is a fall then we can test 10500 levels and in worst case 10200 levels. The series is also starting with 51% long positions vs 29% in November so there are more longs than shorts in the Futures market. The Nifty put-call ratio is also starting off at 1.72 which is over the heated zone and the overall roll overs from November to December is 71% which is higher than the average of 68% seen for the year 2018.

What is the Nifty call for the day?

Today is the first day of the series, Nifty will open bit gap up at around 10870-10900 levels and where it goes from there needs to be seen. There are too many fundamental factors affecting the market so for me today will be a wait and watch day. No positions to be taken, even if you see Nifty moving to 10950 after open. Keeping money safe is better than losing it taking risks. 

Market Trade Setup 2nd November #NIFTY

Market Setup 2nd November

As we approach Diwali good news seem to be building up slowly and steadily. The big news today is Brent Crude falling to 72.6 dollars. The put it in a lighter way, Brent is now lower than Dollar vs Rupee value. The reason for crude falling is the highly supply in Middle east, Russia and US and all the three major markets reporting surplus, automatically the prices fall and this is what has happened today which is perfect for a country like India. US markets closed positive yesterday with Dow gaining another 200 plus points and today the entire Asia is looking green with Hong Kong up more than 600 points. So, a perfect start is expected today.

Coming to domestics, though the global factors look fantastic, Q2 results that came yesterday were just average or missed expectations. So far Q2 results have been slightly above average. Out of 28 Nifty companies that reported their Q2 18 of the them have met the expectations and 10 have missed the expectations. BPCL was a big disappointment yesterday and that was primarily due to higher crude prices and Govt asking OMCs to absorb some of the losses. The other bad news that came in is the Auto sales for the month of October. Practically every company has reported a drop in the sales and that will surely impact the market for Automobile companies. The only good news is the October GST collections that crossed 1 lakh crore and stood at 1.07 lakh crore which is the second highest in 2018. March 2018 saw 1.13 lakh crore GST collections.

Following are the Q2 results expected today

1. Bata India
2. Bharat Forge
3. Dhanalakshmi bank
4. Gillette India
5. Godrej Consumer products
6. Indian Oil corportation Ltd
7. Max India
8. Mukta Arts
9. Petronet LNG
10. Power finance corporation
11. Punjab National Bank
12. Steel Authority of India
13. SAREGAMA Music
14. Sun TV
15. TV Today Network
16. Whirlpool India

On the derivatives front, yesterday’s flat movement on Nifty with negative bias has created more short positions in Futures market and the overall long positions fell from 34% to 33% but the Nifty premium has seen a sharp rise. A rise in premium when shorts increase in the system is the indicative of the bullishness that is emerging. The options market also had a mixed response where Nifty put-call ratio fell to 1.53 from 1.55. 10000 put has seen 5.9 lakh positions adding up and 10400 put saw 5 lakh positions being built. On the call side 10400 call saw 8 lakh positions while 10700 call saw 2.4 lakh positions getting built. Now 10000 put and 10500 call has the maximum accumulated open interest.

What is the Nifty call for the day?

I was right when I said that intra day trading was not possible yesterday and if you have taken a long position anywhere below 10400 as suggested by me, today you will have a 70 point profit at open itself. Nifty will open around 10430-10450 levels and 10480-10500 is a strong resistance zone. So, my suggestion is you would have made a 100 point profit if Nifty reaches 10480 levels and exit your positions by this point. Risk is more once Nifty crosses 10500 and with a weekend coming up, it is better to pocket the profit and go home.

Market Trade Setup 9th August #Nifty

Markets and News

Another new all time high hit yesterday and the market is moving only higher, higher and higher. The US markets are also playing the ball and yesterday NASDAQ posted 7 session positive closing which is happening only second time this year. Dow Jones took a slight breather last night when it closed 50 points down. The best news is coming from the Crude oil front, where Crude it a 7 week low with brent crude falling below 72.5 dollars straight from 75 dollars. Asia is gravitating between mild red and mild green.

Domestic Cues

On the domestic front, the story of this month has been coming back of FIIs to the Indian markets. In May and June FIIs sod in cast market and July saw an almost flat action from FIIs. August however saw some positivity and they bought 1134 crore and that means money is coming back to India from FIIs. On the other news, HPCL and BPCL have reported weak numbers on the back of increasing Crude price and pressure on margins. NMDC is down but they look much better than expectations. In the pharma space Cipla has come up with a decent set of numbers.

Derivatives Action

On the derivatives front there has been a mixed action on the futures front and the Nifty long positions on futures remained constant at 58%. However the action on options front was different with a lot of demand getting created for options. The Nifty put call ratio rose to 1.77 from 1.67 and that is the big worry. 11300 put added 7.9 lakh contracts and 11400 put added 7.8 lakh contracts and 11500 put added 3.8 lakh contracts. On the call side 11700 call added 2.1 lakh contracts while in all the other strikes there was unwinding of positions.

What is the Nifty call for the day?

A flat Asia means we might open flat around 11450 and these all time high areas really dont have markers. Crude is positive but the internals are putting pressure on markets. If FIIs continue buying in cash market, it will make Nifty to go up, but this is an exhausted Nifty and 11480 is a zone where it might halt. On the down side 11400-11420 is a support zone and we need to see whether Nifty has the mojo to cross 11480 or not.

Market Trade Setup 17th July #Nifty

Markets and News

Yesterday I talked about Nifty put call ratio being at 1.79 and its very much over heated. From this level it has to come down and the only way it can happen is when call shorting happens. Call shorting is a mildly bearish strategy and that means a temporary fall in the Nifty. At hindsight anyone can talk about it, but I just fell short of predicting the market from that angle. If I had done that I would have seen markets going to 10920 not 10980. These are the misses that one has to live with, and we all mature on them.

Today the cues are mixed with Dow Jones closing flat but there was a 13% fall in Netflix as they reported lower than expected subscriber additions. Both domestic as well as international subscriptions came lower than expected. The point one needs to understand is, at the time when Google, Amazon, Facebook and Apple are coming up with fantastic additions, Netflix is not able to catch up. This is the big worry that market watchers are worried about. The good news however was the permission given to Iran even after its deadline of November, set as a part of sanctions to sell crude is slightly relaxed. The result is Brent Crude fell to 72 dollars.

Domestic Cues

On the domestic front, the WPI inflation comes at a 5 year high at 5.77% mainly on the food and the fuel prices. Vegetable prices are at 8% in June vs 2.5% in May and fuel inflation is 16% in June vs 11% in May. The number is not at all encouraging and now the case is very strong for RBI to hike the interest rates in its August policy. Meanwhile the Q1 results of HUL were almost as expected with 12% growth in volumes and 19.2% increase in profits. The profits were marginally below expectations and now some of the brokerages are feeling that HUL is plateauing out. But my personal view is, I want to wait a bit more before concluding anything.

Quarterly Earnings

Now Q1 season has picked up and the companies declaring their Q1 is going up. Here is some of them.

1. Ashok Leyland

2. CRISIL

3. Federal Bank

4. ICICI General Insurance

5. Muthoot Capital services

6. Rallis India

7. Sintex

8. Tata Sponge

9. Zee Entertainment

Derivatives Action

On the derivatives front, as mentioned earlier yesterday morning the Nifty put call ratio was at 1.79 which is overheated and by the end of the day it came down to 1.62. There was a massive unwinding of positions on the put side with 11000 put shedding 4.4 lakh positions, 10900 put 3.9 lakh positions, 10800 put 2.9 lakh positions. When 11000 put shed 4.4 lakh positions 11000 call added 6.3 lakh positions in the open interest and that brought down the put call ratio. 11100 call also added 5.9 lakh positions and the premium there fell by 60%.

What is the Nifty call for the day?

A flat to negative Asia means, we will also open around 10930 levels and the Crude will be the news that might push the markets up. Yesterday, you might have taken positions at 10980 levels and they might be in losses now. Wait patiently and the losses will be trimmed. 11020 is a temporary resistance and if you dont want to risk exit for a small 40 point profit whenever it is reached this week. Do not take any new positions and if you want to exit the market at 10980 which is no profit and no loss you can do that. Today Nifty will find support at 10880-10900 levels and can touch 10980 on the upper end.

Market Trade Setup 5th July #Nifty

Markets and News
I had told you yesterday that India might sing a different tune from Asia and that is what exactly happened. Nifty gained 70 points even when Asia was sulking at July 6th sanctions. That shows that China’s problem is not worrying India in any way. The US markets were shut yesterday and so no cues are available from there and today morning Asia is still worried about what will happen when US will impose sanctions on China. Shanghai, Hong Kong and Japan are all in mild red and we await how US will react tonight when their markets open.
Domestic Cues
On the domestics, US trade sanctions are a non-event for us, and what is important is the MSP rates that was announced by Govt yesterday. The rice MSP has gone up by a record 200 rupees per 100kg and there was a 50% hike in MSP’s of all other commodities. That would push inflation by at least 0.5% and that would mean the August credit policy might see another rate hike. Another cue to watch out is the drop in the Crude prices from over 78 dollars to 77.50 dollars and that might ease worries on rising crude. RIL’s AGM is scheduled today at 11am and we might expect some announcement from Mukesh Ambani which might move the market.
Derivatives Action
So, we have a bunch of fundamentals to look out for and the technicals will take a back seat a bit today. So, on the derivatives front, we have Nifty futures not matching to the rise in Nifty spot yesterday which shows that buying is really not happening on futures market. The nifty went up by 70 points but Nifty futures went up only by 55 points. That is a worry for people who actively took long positions on Nifty and kept it open today. The options market also saw puts being more in demand than call. The Nifty put call ratio is at 1.53 at the close from 1.50 at the open. 10700 put added 4.2 lakh positions while 10800 put added 2.8 lakh positions. On the call side only 10900 call added 1 lakh positions.
What is the Nifty call for the day?
When many technical gurus were advocating short positions, I advised long on Nifty at 10680 yesterday with 10750-10780 as the target and that target was achieved yesterday. You would have pocketed the profit. Today is a different day. Nifty will open flat to positive and 10780 is a resistance to watch out for. If RIL AGM goes well we might even see a 10820 today and at higher levels there is a pressure and selling might bring Nifty back to 10750 to 10720 levels. So, wait for the right moment to re-enter and I will tweet the timing and till then, wait and watch!!

Market Trade Setup 4th July #Nifty

Markets and News

As we approach mid week the blues are back on the market again. One step backward and two steps forward seem to be the order of the day. US has ended lower as the date of trade sanctions against China is approaching. 6th July is when US is imposing 34 billion dollar worth trade sanctions and China said it will also retaliate. US wont trade today as it is their Independence Day and that is the main reason why US dropped to pre-empt the trade tariff deadline. Asia is also a bit worried with the approaching deadline and most of the Asian markets are in red.

Domestic Cues

On the domestics, India is slightly different from Hong Kong, China or Japan when it comes to trade sanctions and so, their worries are not necessarily our worries. We have a different set of worries to take care of. The top one in that list is Crude price which has crossed 78 dollars and that might start to push the prices up. For last 9 days the prices of Petrol have remained stagnant at 80.03 at Hyderabad. Good news is that dollar index has come down a bit and that might keep the rupee in 68 zone which is definitely a good news.

Derivatives Action

On the derivatives front, there was a rapid increase in the long positions and the overall long positions now stand at 40% again and the Nifty premium also has gone up from 0.5 points at the beginning of the day to 12 points. The options data also showed bullishness with Nifty put call ratio touching 1.50 from 1.45 because of the positions that were built on put side as Nifty crossed 10700. 10600 and 10700 put both added 4 lakh positions each and 10600 is again getting established as the strong support.

What is Nifty strategy for the day?

Today might be a day when India could sing a different tune than rest of Asia. The opening again will be around 10680-10700 zone which is the 50dma and if Nifty holds this level, without slipping below 10650 then we can see a push towards 10750-10780 zones. That push can be taken advantage of by taking a long position on a dip towards 10700 with 10750-10780 as the target. Do not consider a long if Nifty struggles between 10650-10700