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.