Market Trade Setup 11th February 2019 #NIFTY
We are back to the 2nd week of this shortest month after a big 125 point fall on Friday, erasing almost all the gains made during the week. This week starts off with a big warning from IMF Chief Christine Laggard saying “When there are too many clouds it takes one lighting for the storm to commence”. Added to that fact state, an economic monitoring agency has forecasted a contract of earnings of more than 1% in the 1st quarter of 2019. All that has started to impact the market and the US-China trade talks not going anywhere, there is dullness all over. Most of the Asian markets that were shut for one full week on the back of Lunar new year of China have opened today and are trading mixed.
Coming to domestics, there was a big fall on Friday on the back of disappointing news from the Q3 front. Tata Motors was a big disappointment and things are looking very bad for many companies. Debt has become a bad word today and any company which has more debt than it can manage is seen collapsing. The classic example is the pack of ADAG stocks and stocks like Escorts, Tata Steel, M&M etc. Almost all the auto stocks have cut their guidance and this spells doom to the automobile sector. The Q3 results are in its last stage and following are results expected today: Amararaja batteries, Andhra bank, Century textiles, Eicher Motors, Hindustan copper, Max retail, Motherson Sumi, Spicejet and Virinchi.
On the derivatives front, there was a huge selling in the Nifty futures on Friday and that took the overall long positions to under 50% again and now they are at 49%. On the options front also, lots of short positions were unwound on put side taking the Nifty put-call ratio to 1.59 from 1.82. 11000 put shed 7.3 lakh positions while 10900 lost 7.2 lakh positions and 10500 put lost 6.4 lakh contracts. 10400 now has the highest open interest which is scary. 10700 is close behind it. On the call side, 11000 call added 6.7 lakh positions and it has the highest open interest. Another news is weekly options will kick off from today and Nifty and from today we will have the first weekly options opening for 14th February.
What is the Nifty call for the day?
This is a very uncertain market and Friday’s fall has established that strongly. I cautioned you from trading on Friday and am sure you would be feeling happy about your money being in your pocket. Looks like even today you have to keep your money in your pocket itself. Nifty is likely to open around 10920-10950 zone which is the previous resistance and now support. We need to see if that is taken as a support and move up. Even if it does 10980 is another resistance and we need to see where the Nifty closes. If Nifty closes above 11000 then we can have fresh trade opportunities from tomorrow. Else, it’s going to be another long wait for an opportunity to emerge.
Market Setup 19th December
Yesterday was a picture perfect day for Nifty where, after opening gap down Nifty took support at 10820 levels and the late afternoon rally took it past 10900 and closed above 10900. My prediction of 10970 for this series is now just few steps away. Last night globally, things were stable and it is expected that after a 500 point cut Dow will have some stability. Dow closed 80 points up as the Fed gave an indication that this could be the last rate hike in at least in next 6 months to come. That has also pulled the Asian markets up and almost all the markets are trading in mild green.
On the domestic front, the big news is the announcement of the bond purchases of Rs 15,000 Cr each twice in December and another 50,000 Cr OMOs set out in January. This will set bond markets on fire and that could also push the stock markets. The rupee also experienced a huge appreciation of 140 paise yesterday and today also Rupee will recover due to the bond purchases. Added to this another good news coming from minister Ramdas Athawale. He said that Govt will soon transfer 3 lakh rupees into every bank account but he did not clearly mention the exact date of when that could happen. So, there are a lot of news around this and we might hear a lot of noise on this in the coming days.
On the derivatives front, the overall long positions in the Nifty futures has remained steady at 47% though there was a fall in the Nifty in the morning. In the options market however there was a mild dip in the Nifty put call ratio which dropped marginally to 1.59 from 1.61 yesterday. 10900 put added 5.6 lakh positions while all the other strikes dropped open interests. On the call side 11100 call added 2.1 lakh positions while 10900 call added 2 lakh positions. 11300 call added 1.3 lakh positions while all the other positions dropped open interest. 10000 put and 11000 call still have the highest open interest. 10800 put has the second highest open interest.
What is the Nifty call for the day?
If yo have taken positions yesterday around 10850 and if they are open today you will get a handsome profit on them. Nifty will open gap up today between 10930-10950 levels and might go to 10970 or even touch 11000. Keep the positions till then or close them around 10970 if the up move becomes tougher. Handsome profits for the day and I dont suggest any positions for the day. Time to book profits and enjoy.
Market Trade Setup 24th September
The expiry week is here for the September series. This could be the most dangerous expiry week I have seen in last 2 years. I am not saying that because there will be a fall, am saying this because of the way market fell and recovered on Friday. That opened up the volatility and high volatility on expiry week is something which is dangerous. Last 3 series saw a 1200 point gain of Nifty and with Friday’s low of 10860 levels means we have corrected 61.8% at 11000 levels and Nifty has moved above that level now. The risk now is will this hold or are we going to see Nifty test 11000 another time?
Globally things are not looking that fine, with Dow Jones closing almost flat and most of the Asian markets are in red. Hong Kong is down more than 300 points and the other Asian markets are also trending in negative. The Brent Crude is worsening now and its almost at 80 dollars level now. On the domestic front however the DHLF crisis seems to have temporarily settled with management saying that all is well now but I&FS is in deep trouble and resignations are happening at the top. All this will have some impact on the market today.
On the derivatives front also, bearishness seems to have gripped the market. The Nifty premium for futures is dropping rapidly and the focus has shifted to Options on Friday itself as many traders went on a buying spree. Lot of put buying was seen on Friday where 5 puts were bought for every 2 calls and when it comes to shorting the scenario is reversed. 5 calls sold for every 2 puts sold and that kept the Nifty put call ratio unchanged at 1.14. 11000 put and 11500 call still continues to have highest accumulated open interest triggering volatility in the market.
What is the Nifty call for the day?
Friday saw almost a 400 point swing on the Nifty and today it will be another flat to negative opening around 11100 levels and 11000 is the support for the market for any drop. On the upside the market can touch 11180 levels and that might present a resistance. We are in a clueless zone now and I feel we need to see the market for sometime before venturing into any positions. This is a very volatile market and one needs to establish the direction clearly before going for any positions.