Tag Archives: Derivatives

Market Trade Setup 19th December #NIFTY

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 11th December #NIFTY

Market setup 11th December

What started as global growth fear has escalated into a huge domestic scare with a series of events yesterday pulling Nifty down more than 200 points and we have cues today that can take markets another 200 points down or wipe out all the losses that we got yesterday. The US has finally recovered from the losses that were made till yesterday and closed almost flat. Asia is also in the flat to green just like the US market but India will not be bothered about all that. It will also not bothered about the fact that Brent Crude has reached 60 dollars per barrel. India will have its own fundamental and that fundamental is Urjit Patel and 5 state elections.
Coming to domestics, its the election results day and the exit polls suggest a 2-1 victory of Congress in 3 states and markets were factoring in 1-2 for Congress. A 3-0 win for Congress could result in another 200 point fall. A 3-0 win for BJP would mean all the losses that Nifty made yesterday will be wiped out.
So, you have a lot of volatility and a lot of things to look for. Added to this is Telangana where though BJP has nothing directly, but indirectly if TRS fails to get a majority then it could come in the picture as it has already offered to support TRS. Mizoram is the last Congress state standing and a loss here would mean we have a congress mukt Northeast. A 3-0 loss to Congress means we will almost have a Congress mukt Bharat except for Punjab and Karnataka where it’s in a fragile coalition. Urjit Patel resigning might be a news of the past and we will talk about it some other day.


What is the Nifty call for the day?

We cant even predict the open as everything depends on the election trends. As of now Congress is in lead in Rajasthan and Madhya Pradesh while Chattisgarh is going tight. This is just postal ballots so we cant conclude anything from this. I present two scenarios here. Scenario one where if Congress is sweeping the 3 states, wait for the reaction to get over and allow Nifty to fall another 200-300 points and look to enter with a long position then. The other scenario is where BJP is winning then you can enter into a long position quickly. You can wait for my updates as the election builds up. For now, just watch the results.

Market Trade Setup 29th November #NIFTY

Market Setup 29th November

Finally, we are on the expiry day for the 11th series of this year. What a way to end the series that started at 10070 levels with a big doubt on which direction the market will go. There were many who talked about 9500 levels and historically November was not a good series. Added to that is the Dovish statements by US Fed where they indicated that the interest rates would not be disturbed that much and they would observe the growth bit more carefully has pushed the Dow Jones up more than 600 points and the Asian markets are in the green. Added to that is the Brent Crude which as now fallen to 58.8 dollars on the back of Saudi Arabia which is refusing to cut the output.

On the domestics, the behaviour of the market from 2PM yesterday, we have seen a rally which indicates that BJP has done reasonably well in Madhya Pradesh and has pulled itself well in Malwa region where Congress was expected to make some gains. The SGX also is suggesting a 90 point growth which is 0.8% higher while Hong Kong and Japan are up 0.2 to 0.4%. This also says that the final unofficial numbers that would have come after market hours would have gone decisively the BJP way. Today is the expiry and so its the expiry factors that would play a major role. There was some re-casting done on GDP which I would keep it for later date.

Coming to the derivatives market, yesterday was an out and out bullish from afternoon and the Nifty put call ratio is at 1.81 which is now the bubble zone and on the expiry day it is usual. The series will come to an end today, so this is not a major factor. As predicted yesterday 10800 emerged as the strike with highest open interest on the call side and on the put side a lot of confusion is emerging and 10600 which remained till 2.30PM has given up and today it might again come back. But things are going to change rapidly when there is a gap up of 80-90 points that happens now.

What is the Nifty call for the day?

November series so far has seen 603 points gain and that means this is series belongs to bulls and now it is 6-5 in favour of bulls. The opening today is going to be at 10800 level which is where lot of short positions were taken and any expiry above 10810 level means lot of people will lose money. So, we need to see what happens between 10810-10830 zone. If there is a fall then 10750 might come as a support.

Following are the possibilities that can be visualized now

1. Opening at 10800, Nifty being in 10780-10830 zone till afternoon and a big 3PM move down to 10750 and an expiry at 10780 levels. This looks most probable now.

2. Opening at 10800, Nifty going to 10850 levels and then a 3PM move to 10780 and a close around 10800-10810 levels. 

3. Opening at 10800, quick fall in Nifty to 10750, spend rest of the day between 10750-10780 zone and 3PM move on upside taking Nifty to 10830 and close around 10800-10820 zones.

4. Opening at 10800, quick fall to 10750, spend rest of the day between 10750-10780 and a 3PM move down to 10720 and close around 10740 levels.On the back of these, I suggest you to keep the short strangle intact and dont take further positions. Today might not be as exciting as other expiry days are going to be.

So, I suggest no trading today, just observe and see how expiry pans out.

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

Market Setup 3rd May

Markets and News
When I was talking about 10650 as a support yesterday, many of you might have wondered how it can lose 90-100 points from 10750 levels. Markets are never linear and when you take long positions, it could be a swing trade or a weekly or a monthly trade that works with its ups and downs. Intraday trade is not possible every day and intraday calls are usually given after markets open as we need to understand the dynamics of them and it is possible only after market opens. Today is one such day where US markets lost some gains with Dow closing 150 points down. The reason is the US fed which left the rates unchanged and said that there is a upward risk to inflation and US non food, non-fuel inflation is likely to go above 2%.
Domestic Cues
On the domestics, dollar index which crossed 92.5 will be a worry as any further move could put pressure on rupee and it might touch 67 which is something we have not seen for some time. Crude oil is at again at 74 and the Q4 numbers started to disappoint. n fundamentals, GST council is thinking of adding 5% cess on sugar and coming to micros most of the companies that came up with their Q4 results yesterday were either average or bad and now, starting from HCL and ending with Siemens. Now the hope is on today’s Q4 numbers and how they would be.
Here is the list.
1. Adani ports
2. Adani power
3. Castrol India
4. Edelweiss
5. Emami Ltd
6. Hexaware
7. IRB Infra
8. JSW Energy
9. MRF
10. PNB housing
11. Sri Renuka sugars
12. Vedanta
Derivatives Action
On the derivatives front, yesterday saw a lot of action in the futures markets and the futures premium which was around 40 points in the morning halved by afternoon and ended at 26 points. That indicates a lot of selling that happened as Nifty started to break 10750 mark and the Nifty long positions has decreased from 58% from the beginning of the day to 56% at the end of the day.
The options market also remained more or less flat with respect to puts and calls and we saw equal numbers coming from both sides keeping PCR to 1.52. 11000 call still has the highest accumulated open interest of 60.3 lakh shares while 10500 put has 45.7 lakh accumulated open interest indicating that this series its the move between 10550 and 11050 mark. Yesterday for the first time 11000 call added the highest open interest of 3.5 lakh contracts and 10500 put added maximum open interest of 8.1 lakh contracts. So, this expiry is definitely between these two markers.
What is the Nifty and bank nifty call for the day?
A negative Asia triggered by negative US means we will open a bit gap down probably around 10700 levels and what happens from there needs to be seen. 10650 is the temporary support and a close above 10700 means the uptrend is intact and if by any chance Nifty breaks 10650 and goes below then it could trigger panic.
The more important story is bank nifty, which has its weekly expiry today and it is the time we usually look at the positions in the options. There is put shorting that can be done today and even call shorting is also possible. 25600 short straddle is something that you can take and wait for my tweet to take it.

Market Setup 2nd May

Markets and News
Welcome to May, the month which is the saying “Sell in May and go away”, and emerging is the slogan “Buy in May and stay”. Behavioral change with time and if we look at last 10 years May has been a good month majority of times, indicating that there is nothing in the market that shows it will fall in near future. Having said that, it is way too early to say all that but globally things are looking very good. Dow has stopped its fall, Crude is now at 73 dollars and the bonds are also stabilizing but the only worry for India is dollar index which touched the all time high of 2018 of 92.
Domestic Cues
On the domestic front, things are looking fantastic with auto sales numbers for April beating expectations. Maruti Suzuki is the topper and today we could see the stock surging further up. The GST tax collections has now crossed 1 lakh crore. I was expecting it to happen in the month of June but they have happened in the May itself. The Q4 results so far have been the best that we have seen in the last 6 quarters with whole range of companies coming with good results. FMCG major Dabur came up with a fantastic numbers with 19% growth in profits. Honey sales grew at 24% and toothpaste at 20%. Expect Dabur to go up.
Following are the Q4 results expected today.
1. Ajanta Pharma
2. Century Textiles
3. HCL Tech
4. Hero Motocorp
5. HT Media
6. Indigo Airlines
7. JM Financials
8. Marico Industries
9. Rane Engines
10. Siemens
11. Tata power
12. TBZ Jewellers
13. Visa steel
Derivatives Action
On the derivatives front, the linear uptrend of Nifty on Monday had a lot f impact on futures market with lot of long positions being taken there. That has now pushed the overall long positions to 58% and at the series it was 53%. On the options front, there has been a lot of consolidation both on puts and calls side and the nifty put call ratio remained flat at 1.53 vs 1.52 at the beginning of the day. The point to note is the buying that has happened at 10600 and 10700 puts as the hedge to the long positions that traders are taking in Futures. These, if the Nifty doesn’t correct will have to be covered, which will give more push to the market on the upside.
What is the Nifty and bank Nifty call for the day?
A flat to negative Asia should not stop India from opening flat around 10720 levels and what happens from there needs to be seen. 10650 is a very strong support and if you have long positions taken on Monday you can keep them to meet the target of 10800. If you don’t have a long position, then any dip towards 10700 should be taken as an opportunity to enter the market by taking a long position with the target of 10800 to be achieved anytime this week.
On the Bank Nifty front, I see it to be more bullish than Nifty and keep the long positions and wait for 25700 to be achieved. Again if you don’t have positions any dip should be bought with 25700 as the target.

Market Setup 30th April

Markets and News
Last day of April, first week of May starting on a very positive note. Q4 results are fantastic and even a half dead telecom company like Idea cellular has come up with a good Q4 result where EBITDA beating the estimate and the loss came at close to 700 Cr vs expected 1200 Cr. The global factors are neutral with Dow closing in a flat territory on Friday with GDP of US coming at 2.3% just as expected and Asia is in a green zone today and that might rub off on India. Crude also has settled down at 74.50 dollars and doesnt seem to be moving away.
Domestic Cues
On the domestics, the big news is Indigo CEO Aditya Ghosh suddenly resigning and that happened on Friday evening after markets closed. But somehow the news seem to have leaked and stock fell by 6% on Friday.
We need to see how much more Indigo will lose before settling down. The differences with the owners on how to go for the expansion seems to be the major reason for him to quit. He was the CEO for 10 years from 2008 to 2018 and has brought Indigo from nowhere to being the 4th largest low cost Airline in the World. Now for some good news. Good news is on 28th April 2018 at 5.30PM the last village in Meghalaya was electrified thus completing the electrification of all the villages. India is now a fully electrified country, something which took us 70 years to achieve and it is a great news indeed with 5.97 lakh villages in India completely electrified.
Meanwhile the Q4 results season is on and following are the companies coming up with their Q4 numbers today.
1. Ceat Tyres
2. Container Corp India
5. Kotak Mahindra Bank
Derivatives Action
On the derivatives front, Nifty 70 point upward move has created a lot of buying on the long side in Nifty Futures. The Futures long positions which were at 54% at the beginning of the May series now stand at 57%. In the options market there has been more demand on the puts side and the May series that started with 1.49 as the put call ratio has gone up to 1.52 by the end of Friday. 11000 call saw 7.3 lakh contacts build up while 10900 call saw 5.3 lakh, 10800 call 3.4 lakh contracts respectively. On the puts side 10600 put saw 7.2 lakh contracts, 10500 put 7 lakh contracts 10700 put 6.2 lakh contracts and 10400 put saw 4.1 lakh contracts respectively.
What is the Nifty and Bank Nifty call for the day?
Most of the Asian markets are shut today and SGX is suggesting a slight gap up so we might open above 10700 mark and immediately 10720 will act as a resistance. 10700 was a target for many and that being achieved, expect some profit taking at that level. You might see Nifty correcting intraday and might come down to 10650 which could be a very good level to enter into the market and take a long position with 10800 as the target for sometime to be achieved in this series.
Bank Nifty is a slightly different story than Nifty and with Axis bank recovering and Kotak coming up with its Q4 result today, after the initial cool off it is advised to go long in Bank Nifty with 25700 as the target.

Market Setup 27th April

Markets and News
First day of May series, and the famous behavioral finance quote “Sell in May and go away” comes to mind automatically. But if we see India the last 3 years May series all had a positive close, though it was a growth between 1.5 to 2.5% which is good enough if not great. So will this May be another month following up 2015, 2016 and 2017 or will it be a different year this time. There are lot of markers that points to a better May if we look at it technically. The Nifty roll overs from April to May has been at 72% which is higher than the average rollovers of 65% for the first 3 months of this year.
Not only that, the open interest for May is also starting at higher than average. May is starting with 2.2 Cr open interest which is higher than the average of 2 Cr open interest in the first 3 month. Also what you need to focus is on the long positions in the Futures market. It is starting at a healthy 54% compared to dismal 18% in April. Though it is lower than Jan, Feb and March, a 54% long means a healthy start to the series. April series ended with a positive of 504 points and now we have 2 red series and 2 green series this year and all this points to an exciting May.
What are the fundamentals that will affect the May series?
Q4 results is the answer. So far, April has seen 85% above average to good results and that presents a bright picture. But with just 10% of companies declaring results so far, this number should not be taken seriously. So, a good Q4 means market will have legs to go up. The other big fundamental is the Karnataka election results that will come at right in the middle of the month on 15th May. A victory to BJP or even a coalition govt of BJP with JDS will take the markets up. A congress victory means a huge red. Apart from that global actors like Crude prices and FOMC meeting on May 2nd will have limited impact and also the CPI and IIP data that will come in the 2nd week of May will also add to the momentum or take away the momentum.
Derivatives Action
On the derivatives front, the 10500 put and 11000 call is having the highest open interest as we start the series. That means 10500 will act as some support on the fall and it was 30.6 lakh open interest at the start. 11000 call is much more active with 43.8 lakh contracts and that means initially the tendency will be to move towards 11000 and 10800 will be the first major resistance as it resumes its journey towards that point. At 27.5 lakh contracts 10800 will be one call where profit booking might happen. Above all the nifty put call ratio ended at 1.70 which is kind of over heated zone for the month of April.
What is the Nifty and bank Nifty call for the day?
The first day of the series is either the day to relax and watch the market or look at going for a long straddle or a strangle. If you are thinking so, I would suggest a long strangle at 10500 and 11000 put and call respectively and you spend 130 rupees roughly. If you feel you need to look at it more take a break, watch how May goes and then enter it on Monday. Ditto is the call for bank nifty.

Market Setup 26th April

Markets and News
The 4th expiry day of the year 2018 is here. It is 2-2 so far for bulls and bears with Bulls winning January series with 650 plus points and now the April series with 450 points. The bears won the February and March series with 650 points and 300 points. April has seen a huge uptrend in stocks also with Reliance growing at 9%, Kotak bank 11%, Mindtree at 24%, TCS at 12% but there are losers also. SBI even after 4% gain in Nifty fell by 5%, PC Jewellers fell by 24%. IT stocks did well but Infosys and Wipro were flat. Infosys grew by 3% and Wipro by just 2%. Let’s wait and see if the 456 point uptrend in this series will be maintained and close above 500 point gain or not.
Global cues are looking flat and confused. Dow jones closed positive last night after 5 days of falling. The 10 yr bond in US has now gone to 3.02% and now that means that money is going to get costlier. Brent crude is still at 74.50 and its not good. Domestics wise its the Q4 results that is leading the market and Wipro disappointed yesterday with a bad Q4 numbers. Today there are crucial banks like Axis bank and Yes bank coming up with their Q4.
Following are the other companies that are releasing their Q4 numbers.
1. Axis bank
2. Rallis India
3. Reliance Capital
4. SBI Life
5. Tata Elxsi
6. Tata Metallics
7. Yes bank
Derivatives Action
On the derivatives front, its all about expiry today and the cues are primarily on the options market than on the futures market. This time the premiums are low compared to other series primarily because lot of short positions have already been taken as money making has become easy now. Its a lesson that whenever things get easy and predictable, rewards decrease. The calls have slowly come into demand now and yesterday the put call ratio came down from 1.70 to 1.61. 10700 call and 10500 put has maximum open interest but in between this all the strikes have become very active.
Following are the possibilities for today’s expiry.
1. Nifty opening flat, staying above 10580 and going above 10600 and closing at 10610-10620 range with 3PM moving coming on upside. This is the most probable scenario.
2. Nifty staying below 10580 but a sharp 3PM move might take it over 10600 and expiry happening at 10600 levels. This is the next possible scenario.
3. Third is Nifty staying above 10580 and a sharp cline at 3PM seeing the expiry happening at 10550-10570 level. 3rd most probable scenario.
4. Nifty staying between 10550-10580 with a downward 3PM move with expiry at 10520-10530 range. Least probable scenario.
What is the Nifty call for the day?
Today am leaving bank nifty as it is not very relevant and everyone will be looking at Nifty. Expect a flat opening for Nifty around 10570-10580 levels and 10630 will be the major resistance and 10550 is a support. with premiums so low, after the market opens, upon my call try taking a short strangle at 10600 call and 10500 put. At what point you need to go for it, will be tweeted during the day. Apart from that there is nothing you can do. Exit the long position taken yesterday for May if the target of 10600 is met.