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Market Setup

Market Trade Setup 3rd December #Nifty

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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 Setup

Market Trade Setup 21st November #NIFTY

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Market Trade Setup 21st November

What a fall we saw in the last hour yesterday, I was talking about a 1% fall in the Nifty and it has happened that way and Nifty fell exactly 1% and Nifty just managed to hold 10650 mark. Dow Jones had a big fall yesterday of 550 points and with that fall, all the gains that it made in 2018 is gone. Now Dow is at the same level that it was on at the beginning of the year. The Fed policy which was tightening the liquidity and increase in interest rates has started to show a negative impact. The reason for it is, that the interest rates and inflation are increasing but the growth forecast for the US in 2019 is put at just 2%. So, this figure has created a bit of panic and the markets went on a sell-off mode. Asia also started in the deep negative but now they seem to be recovering a bit.

On the domestic front, the polls for Chhattisgarh is completed and the 2nd phase recorded 72% of polling and that is little above the 71% polling that we saw in phase 1. The initial ground reports have suggested that BJP has managed to split the opposition vote and it is looking to win above 50 seats and pushing Congress below 40 seats. This might act a bit on the market today. Another major positive news is the drop in the crude oil prices. Brent Crude which was nearing 67 dollars yesterday has now dropped to 63.1 dollars. The result is Petrol prices in Hyderabad that reached 89.06 on 4th October have now dropped to 80.98 yesterday and could go below 80 rupees by today or tomorrow. This will be a huge positive for India as any drop in crude will boost almost all the sectors.

On the derivatives front, though there was a big fall in the last hour in the trade yesterday, the overall long positions in Nifty futures market remained steady at 41%. Also, another positive sign is the Nifty futures premium which was just 5 points at the beginning of the day went to 15 points at the end of the day. The options market saw some bearish sign with Nifty put-call ratio correcting from 1.72 to 1.64 again. This is actually a good sign as PCR has receded from the overheated zone. 10800 call now has the highest accumulated open interest of 36.1 lakh contracts vs 34.2 lakh contracts at 11000. so, 10800 is now going to be seen as the roof for the market. The floor,however,  continues to be at 10000 which presents a downside risk for the market.

What is the Nifty call for the day?

Yesterday I talked about repeating the trade of going long around 10700 levels if Nifty sustains 10680. As Nifty held 10700 many would have taken a long position and they are now in some losses. Wait for the recovery today and close the positions if Nifty comes in 10730 zones, though it is a minor 30-40 point profit, it is worth because there is a lot of uncertainty in the market. The opening will be flat around 10650-10670 zone and the crude fundamental might take the market up. 10750 is the 200 DMA and 10720 is the 50DMA and Nifty might gravitate between these two levels. So, I would suggest exit between these two levels. If you don’t have a position, then take a long at the opening and exit at 10720-10750 level.

Market Setup

Market Trade Setup 15th November #NIFTY

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Market Trade Setup 15th November

As predicted, yesterday was a day when Nifty has not gone up, touched 10650 and came back. If you have taken out your positions, you are sitting at a handsome profit and if you have not, then there is a gap up and another chance for you to exit the positions. Globally things are not really going great as Dow Jones lost another 200 points yesterday as there are voices in democrats who are saying that they would do everything to stall the banking reforms bill that Trump wants to introduce. Added to that is the stagnant demand for Crude oil which will affect the developed markets across the world.

On the domestic front, today is the last day for the Q2 results season and all the small companies are going to finish off declaring the results. Most of the news are already out and the inflation, GDP and all the other parameters are looking good. The biggest positive still continues to be the Brent crude which is now at 65.8 dollars and because of that even Rupee is appreciating which is a good news for India. Petrol price in Hyderabad is likely to come down lower than 82 rupees and this drop from the 89.6 rupees seen 6 weeks ago tells the story of how much improvement is happening on that front. So, Crude is the only fundamental that has the potential to push the market today.

On the derivatives front, 10000 put is again becoming stronger yesterday when 2 lakh positions were added and 10200 put saw 2.2 lakh positions taken out. So, lack of forward movement yesterday in Nifty made the traders to believe that Nifty can still go to 10000 this series and that still continues to have highest accumulated open interest. 10900 call is adding maximum open interest on call side but 11000 call still continues to have the highest open interest and that also added 2.1 lakh positions yesterday. This has kept the Nifty put call ratio flat at 1.60 and still the chances are volatility is higher with 10000 on the lower end and 11000 on the higher end. Nifty is at 10580.

What is the Nifty call for the day?

Asia is more or less flat with a positive bias, except Japan which is showing a negative trend. India might open bit gap up today above 10600 level and 10620-10650 is still a strong resistance zone, and the call is going to be the same. I would not want to suggest any new positions till Nifty decisively crosses the 10650-10680 mark and goes up. Till that moment I would give a wait and watch signal. Just relax and see what Nifty does. If there is a fall see if Nifty closes below 10550 mark or not.

Market Setup

Market Trade Setup 12th November #NIFTY

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Market Trade Setup 12th November

The Third week of the November starts and now we are entering into the second half of the month. The first half has been really good for the market that fell 1500 points in 2 months, we have seen 500 point recovery in 2 weeks. Now its at the cusp of 10600 and its a point from where Nifty has to decide whether it wants to go up or re-test 10000 level again. Globally things are not looking very great as dollar index surging to 97 and risk aversion coming into the market. Bonds are getting more attractive than equities and that has pulled Dow Jones down 200 points and Asian markets are more or less flat and Brent Crude is again moving up after touching 69. It is now exactly at 71 dollars.

Coming to domestics, we have a lot of fundamentals to take care of in the second half. The Q2 results season has come to an almost end, with the stock like Britannia reporting their results today. This Q2 has been a disappointment where the growth has been almost flat and thus the Nifty EPS is now likely to be around 10-11% vs an expected 15%. The second major fundamental is the elections starting from today. The state elections in 5 states will start today and end with the result declaration on 11th December which is exactly 1 month away from today. So, a lot of cues will be available for the market to react. Then we also have the September IIP numbers and October CPI and WPI inflation numbers coming in which will also affect market a bit. So, these are the fundamentals to trade for this week.

Coming to derivatives market, the action will now slowly start moving to options market. The Nifty put call ratio in the options market moved to 1.60 from 1.59 even as Nifty closed on a flat note, down 15 points. Firstly there was some unwinding of positions on put side 10000 put saw 1.4 lakh positions unwound and 10200 put saw 1 lakh positions unwound. 10100 put added 4.7 lakh positions which are mostly longs which were taken as hedge to the bullish positions taken. 10500 put added 1.2 lakh positions on the put side and 10000 put continues to have highest accumulated open interest followed by 10200 put. On the call side 11000 call added 3.1 lakh positions and 10800 call added 2.5 lakh positions. 11000 call is now having the highest accumulated open interest and 10800 call and 10700 call has similar open interest. So, 10800 could be a resistance now.

What is the Nifty call for the day?

We will have a flat start today for Nifty around 10560-10580 range and on the down side 10520-10550 is the big support and upside could go all the way to 10650-10680 levels. So, I would suggest you to take a long position at a dip towards 10550 levels with 10650 as the target to be achieved this week itself, if not today. There is a condition where options data is suggesting a support at 10000 level and 11000 as resistance for this series and Nifty is right in the middle at 10580 level. So, another strategy is a long straddle that can be taken at 10550 level with 290 rupee combined premium. You can exit the positions with 10700 on the upside and 10400 level on the downside whichever is achieved first. This position can also serve as a hedge to various other Futures and options positions we are likely to take during the rest of the series.

Market Setup

Market Trade Setup 17th July #Nifty

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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 Setup

Market Setup 22nd May

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Markets and News
Monday blues yesterday with Bank nifty doing much better than Nifty as I have predicted. So, if you had taken a long position in Bank Nifty at the lows you would be sitting on some profits. The global markets are going fine and Dow Jones yesterday gained 300 points on the statements from US that they are not pursuing with sanctions against China and that is a good news. Today Asia is flat, and there are still worries persisting. The Crude is at 79.5 dollars and now its getting prepared to break 80 and start moving upwards probably towards 90 dollars.
Crude is the biggest worry for domestic markets today as petrol and diesel prices are at an all time record high and that would not go well. The dollar index is also at 93.5 which means rupee still could be around 68 dollars and that will make the crude imports worse. Added to that is the disappointments in Q4 results. Both Colgate and Future Retail reported bad results, especially Colgate which reported just a 4% growth in volumes and it has started losing market share in its core toothpaste segment. Today is an important day with SBI, the mother bank coming up with its Q4 results and many are expecting a loss.
Following are the other Q4 results expected today.
1. Andhra Bank
2. Bata India
3. Bosch India
3. Cipla
4. Dr. Reddys
5. Future Consumenr
6. Igarashi Motors
7. Indian Oil Corporation
8. Radio City
9. State Bank of India
10. Bharat Forge
11. TVS Srichakra
12. TV today
13. VIP Industries
Derivatives Action
On the derivatives front, there has been a late surge in the premium in the nifty futures which is bringing in the belief that 10500 might be a temporary support. The Nifty futures premium which was almost zero went upto 20 points by the end of the day, though the overall long positions in Futures is at 52% which is the lowest in this series. In the options market also, the Nifty put call ratio came down to 1.28 from 1.37 and this is because of massive unwinding of puts at various strikes like 10600, 10700 and 10800 where combined 15.6 lakh positions were unwound. 10450 put has built 1.9 lakh positions and at 50 rupees premium 10400 is a firm floor for the market in this series. 10600 call has 13.8 lakh contracts created at 25 rupees premium making 10630 zone a firm roof for this series.
What is the nifty and Bank nifty call for the day?
Expect a flat opening for Nifty around 10500 mark and it might be a support as well as resistance and that depends on where the open actually happens. It is not required that you should trade everyday but if you feel like, then think of going long around 10480-10500 zone with 10550 as the target. It might work out this week if not today but if 10450 is broken you need to exit.
Bank nifty has gained somewhat yesterday and if you had taken long positions around 25700-25750 you are now at a slight profit. Keep a target of 25800-25850 and exit positions and book profits. Wait for a dip to take further call on this.
Market Setup

Market Setup 9th May

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Markets and News – Crude Worries!
What was feared and I was talking about yesterday has come true. President Trump walks out of Iran nuclear deal and imposes sanctions on Iran. The only silver lining is UK and Russia which are the allies of US in this nuclear deal and not entirely with US on the decision to pull out. So, what should have been a disaster was stopped at a dip. US markets closed flat and Asia is in mild red and still trying to figure out what exactly is the impact of these sanctions. Dollar has strengthened and is approaching 93.5 and Crude which is much more relevant to India is moving towards 77 dollars which is a new high for 2018 and a 5 year high for the Crude.
Domestic Cues
On domestics, today the major factor for the markets is the double whammy of increased crude prices and depreciation of Rupee. IT sector might rally on weak rupee but many companies from Oil, Paints, Auto ancillaries and banks will have some impact on this. The one fundamental that can keep the market in positive mood is the tide turning towards BJP in the Karnataka elections. The Q4 results are also stabilizing with many of the Q4 numbers coming positive.
Following are the Q4 results expected to come today.
1. Eicher Motors
2. EID Sugar
3. Federal Bank
4. Hikal
5. Jindal Steel
6. Orient Hotels
7. Parag Milk
Derivatives Action
On the derivatives front, the worry of US imposing sanctions on Iran was weighing heavily and some short positions were taken in The Nifty bringing down the premium from 26 points to 17 points. However the mood is much more bullish in Options market with call buying starting from yesterday afternoon. Traders are expecting the Nifty to go up on election day and the dip in Nifty was used to buy calls that can give profits if Nifty goes up around election date. There was some put shorting also happening at 10700 put and 10950 call is getting a lot of open interest. So the floor for Nifty could be 10580 considering that 10700 put has 120 rupees premium and 11000 on upside considering 10950 call has a 45 rupee premium. The put all ratio rose marginally to 1.56 from 1.55 seen at the beginning of yesterday.
What is the Nifty and Bank Nifty call for the day?
Bank Nifty has met the given target of 26000 and even went to 26100 intraday. That means you could have easily mad 300-400 point profit on this. On Nifty I was suggesting you to exit positions considering the big fundamental coming today and it has come. If you are still holding the positions, no worries because you need to wait a bit more probably till Monday when markets will react to exit polls. If you have exited the positions, just wait and see how the day progresses today.
Re-entry or taking fresh positions is difficult onNifty today and we need to see if the fall due to sanctions will end or not. We do not know Europe reacts to Trump decision so we have to wait till 1.30PM to see how Europe reacts before we taking any positions. Bank Nifty will be weak today and if you want you can short Bank Nifty at the open around 26000 mark with 25850 as the intraday target. Wait for tweet for further updates.
Market Setup

Market Setup 7th May

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Markets and News
The crucial 2nd week of May with so many global and local cues to watch out for. Warren Buffett says he has done the most purchases and his bet is on Apple now. That made Dow Jones jump and close 300 points above. The brent crude is above 75 dollars at 75.2 now, there is still a lot of suspense over the Iran nuclear deal and US might go ahead and cancel it at any time. All these are things that will affect markets this week. Asia is green following up the US markets with Hong Kong up over 100 points and dollar index is almost touching 93.
Domestic Cues
On domestics we have a mountain of fundamentals to deal with starting with Karnataka elections scheduled this Saturday. Everyday is bringing some news and the tide seems to be slowly turning in BJP’s favour and that might mean lots of longs might build up before going into the polls. The IIP and CPI data is also scheduled this week and RBI has announced its decisions to buy back bonds worth 10,000 crore as OMO and that might lead to fall in the bond yields. We also have Q4 results coming in and today its ICICI which will come up with its Q4.
Following are the other companies that are coming up with their Q4.
1. Dwarkesh sugars
2. Exide India
3. ICICI bank
4. Inox Leisure
5. Pfizer
6. Talwalkers
7. Tata Chemicals
8. Tata Coffee
9. Trident
10. Vijaya bank
11. Zee learn
Derivatives Action
On the derivatives front, there was a lot of action on Friday with demand coming back to Futures positions are Nifty started going towards 10600. The premium on the Nifty Futures went to 40 points from 26 points and the overall long positions went up to 56% again from 54%. On the options market also puts and calls are going neck and neck. 3 short puts for every 2 short calls and 3 calls bought for every 2 puts bought. That kept the Nifty put call ratio almost flat at 1.49 from 1.50 seen at the beginning of Friday. The 11000 call has the maximum accumulated open interest of 57.9 lakh contracts while 10500 put has maximum accumulated open interest of 48 lakhs. Plus the news that derivatives markets will trade from 9am to 11.55pm starting from 1st October 2018 will also push some demand to Futures and options market.
What is the Nifty and bank Nifty call for the day?
Patience is the key when you are in the market and two long positions you took at 10700 and 10650 will be in losses now, but if you can hold your nerve you will see that by the end of the week you would have met your target. Today Nifty will open positive around 10650 and today it might test 10700 levels and downside 10620 to 10600 will be the support. You can hold on, believe in fundamentals and look for the target of 10800 to be achieved sometimes this week.
Bank Nifty has achieved its target and today ICICI bank results might create some nervousness there. Try to buy bank Nifty at anything below 25700 and look for a target of 26000 to be achieved anytime this week.