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Market Trade Setup 4th April #NIFTY

All time high achieved yesterday and that too for just 10 seconds. I think it is the shortest all time highs that is possible in any market. 11760 was the previous all time high and Nifty went to 11761 and then fell. The fall was more in the last one hour of trade primarily due to the sky met forecast on this year’s monsoon. The global markets were positive yesterday with Dow Jones going up for the 5th day and closed in mild green of 40 points. Asian markets are in green, except Hong Kong which is down by 40 points while Japan is up 60 points and all other markets on mild red. Brent Crude however did not go past 70 dollars and has corrected a bit to 69.3 dollars now and the Rupee is going strong and strengthened 32 paise and closed at 68.42 to dollars and now we have a realistic chance of Rupee going to 67 zone.

On the domestic front, the technicals played out in the morning as there was a profit taking that happened as soon as Nifty crossed 11760 zone. But what has triggered a bigger fall was the forecast from sky met for this year’s monsoon which said that monsoon this year will be below normal. Sky met forecast this year’s monsoon to be 93% of LPA which is a 7% deficit from the normal. June is expected to be the worst month with a deficit of 23%, July will have a deficit of 9%. June and July are the sowing months so this can have a major impact on the agricultural production this year. August is likely to be 2% excess while September is likely to be 1% deficit. There was a big correction post this news on the fear of a slow down induced by a bad year. Another news is the credit policy announcement and at 11.45 we will know whether its going to be 50 bps cut or 25 bps cut. 

On the derivatives front, yesterday saw the volumes dropping a bit compared to previous expiries and the turn over on the penultimate day to expiry was under 10 lakh crore at 9.8 lakh crore and we have to see how much we can expect today. In the futures market however the premium on Nifty is very high compared to the average and we have a 76 point premium on Nifty. The Nifty put call ratio in the options market however dropped to 1.42 from 1.52 from the beginning of the day. On put side yesterday there was a huge unwinding of positions and maximum unwinding was at 11700 put that saw 4.1 lakh positions unwinding and 11600 put saw next highest unwinding of 2.3 lakh positions. As a result 11500 put has the highest open interest today and 11600 put is closely behind. On the call side 11800 call added 8.4 lakh positions while 11750 call added 6.7 lakh contracts and we have 11800 call as the big resistance. 

What is the Nifty call for the day?

I had talked about Nifty falling to 11680 zone and a fresh position being initiated there. Yesterday Nifty fell much below that and its now at 11640 zone. If you have taken a long position between 11660-11680 you would be sitting on a minor loss. Today, we might have a good opening in 11660-11690 zone and immediately your positions will be in mild profits. There is a resistance coming in at 11760 which is the all time high and RBI credit policy at 11.45 will decide whether 11760 will be taken out on the upside and we will go to 11800-11810 zone. Otherwise if there is a disappointment we could correct to 11580 levels. So, it is better to have a target of 11750-11770 and exit the positions as soon as Nifty reaches there. This market is on its way to 12000 mark but its not going to be one way traffic. It will be a one step back and two step forward method to reach 12000 mark

Market Trade Setup 18th March #NIFTY

The second half of the series starts off today on a very positive note where the first half has seen more than 400 points gain in the Nifty where it jumped from 10815 level to 11430 level. We need to wait and see how the second half pans out. If 11500 is the cap for Nifty then we just have under 100 points to trade in the next 9 trading sessions and Nifty might be in a flat zone or might correct itself a bit. Globally speaking Friday closed very positive₹ for Dow Jones which closed 140 points higher while all the Asian markets today are in the green with Hong Kong and Japan both up 150 points each.

On the domestic front, on Saturday we had the Trade deficit data for February coming in and it is the best number in last 17 months, which is mainly on the drop in imports and rise in exports. The deficit number is at 9.6 billion dollars vs 14.7 billion seen in January and 12.3 billion seen in the same month last year. This is because of exports going up to 26.6 billion and imports declining to 36.2 billion. The drop in imports is mainly because of the drop in gold imports and falling crude oil prices. In other news dollar index is softening more and today we might see Rupee opening below 69 and I had indicated that in my Friday post itself. Today Rupee could even touch 68.50 levels. Brent Crude has also stabilized and is trading at 67 dollars.

On the derivatives front, the long positions in Futures are at 61% now and with every passing day, the long positions are going up. This presents a case for a sudden fall in Nifty as there are not enough shorts in the system to prevent the fall. In the options market also the put-call ratio has also gone up to 1.77 from 1.71 seen at the opening on Friday. This week expiry is on Wednesday so we just have 2 trading days to expiry day. 11400 put has the highest open interest of 12.7 lakh positions out of which 9.7 lakh came on Friday. On the call side, 11600 now has emerged as the strike with the highest open interest with 8.4 lakh positions. 11500 is close behind with 8.2 lakh positions. For the monthly expiry, however, 11000 put and 11500 call continue to have the highest open interest.

What is the Nifty call for the day?

A green Asia means we will also open a bit higher around 11450-11480 zone and the first resistance will come at 11520-11540 level. On the downside 11380-11410 will be a strong support zone. This weekly expiry data markers show that Nifty has the potential to go up to 11610 this series itself but I feel that 11520 is a zone that will be a bit difficult to cross. I suggest taking a long position at the open itself today between 11450-11480 mark with 11510-11530 as the target. Take this position as soon as Nifty is in that range and don’t wait for the customary 1 hour. If the market is bullish you might not get an opportunity. If Nifty drops to 11380 levels also after you took the position, hold on and wait for the next two days.

Market Trade Setup 11th March #Nifty

Market Trade Setup 11th March
As expected, by the time we entered the 2nd week of March, we have the election dates with us and it’s going to be the nervous 10 weeks ahead with results coming on 23rd May. This news will have an impact on the market and we need to see which direction markets will move now. Globally things are not looking great to start the week with, as there was a disappointment in the jobs data coming from the US and that has put Dow Jones on a flat to negative territory but it was the Asia that started to react from the time Japan opened at 4 AM Indian time. But slowly it’s digesting the data and now almost all of Asia is in flat territory recovering from the opening lows. Brent Crude is still hovering in the range of 64-67 dollars trading at 65.8 dollars now.
Coming to domestics, the announcement that everyone was waiting for has finally come through and we have the announcement of dates for 2019 general elections is finally made. The elections will happen in 7 phases from 11th April to 19th May and the counting will happen on 23rd May. 11th April when the first phase starts is a Thursday and it is an expiry day for a weekly series and 23rd May when counting happens also is a Thursday and will have the 4th weekly expiry of a 5 week May series. We had hit the circuit markers in 2004 and 2009 election days and 2014 election day also saw huge volatility on counting day. So, we need to see how Nifty moves on 23rd May and how expiry will play out, wherein by that time the scenario will be more or less clear as to who will form the next Govt.
On derivatives front, Friday saw some selling in the Nifty futures and we have seen the long exposure in Nifty futures drop from 53% to 52%. On the options front, there was some more correction to Nifty put-call ratio and it’s fallen to 1.60 from 1.68 mark. Last Thursday saw PCR jumping to 1.80 mark. Friday saw Derivative markets cloaking 85.5 lakh contracts worth 5.39 lakh Crores. For the 14th March weekly expiry, 11000 put has the highest open interest of 15.5 lakh positions while 11200 call has a highest open interest at 10.7 lakh positions. So, 11000 put at 40 rupees premium will have the support coming in at 10960-10980 mark and the resistance goes up all the way up to 11210 mark. For monthly expiry, the support and resistance still continue to be at 11000 put and 11500 call. So, this week could take Nifty up to 11200 on the upside and for this month it could go up to 11500 and on the downside 11000 is the support for both.
What is the Nifty call for the day?

On Friday, we have taken positions at around 11020 levels and we are still at no profit no loss zone. Today Nifty will open at 11020-11040 levels and the support will come at 10980-11010 mark and that has the potential to take the Nifty to 11070-11100 mark and Nifty has to break that 11100 mark to go up further. Will the news of elections help Nifty to break that? We have to wait and see. But the moment Nifty reaches 11070-11100 mark it is better to close your long positions and wait for the next opportunity to re-enter. Today your targets might be met.

Market Trade Setup 27th February #Nifty

Surgical strikes 2.0 is completed successfully and this time Pakistan has accepted that and have said they will avenge it. But when and how is for the future but for the time being, this big fundamental is done and we will now have to focus on other things. Tomorrow is the expiry day and the market will now start to focus on it. On the global front, US was flat yesterday after days of positive closing and ended 30 point lower. Asian markets are on a high today and almost all markets except Taiwan are in deep green with Japan and Hong Kong up 100 points each. Brent Crude again started picking up the day after the Trump tweet on prices, now trading at 65.5 dollars. 
On the domestic front, the air strikes were conducted with precision and apprehensions that Pakistan will react seems to have reduced for the time being. Over 300 terrorists have been eliminated in the 21 minute operation that was conducted on 3 locations, two in PoK and the one inside Pakistan mainland. This is probably the only time when our fighter jets have not only crossed LoC but probably have crossed the international border and went into Pakistan mainland into the province of Khyber Phaktunwa. The response from Pakistan was that they will retaliate and avenge the Indian actions and they maintained that there were no casualties. Last night also saw huge firing across the LoC where India seemed to have eliminated 5 more pakistani soldiers. These are far lesser reactions from pakistan than expected, so markets now will move beyond this.
Coming to derivatives tomorrow is the expiry and if we look at the Nifty premium it was 17 points on Monday morning which dropped to 7 points by the time we closed on Monday and by the time we closed yesterday we moved into a deep discount of 8 points, which indicates the amount of short positions that were taken in last 2 trading days. In the options space the Nifty put call ratio again fell as Nifty corrected more than 130 points and closed 40 points down, Nifty PCR is at 1.40 down from 1.46 seen at the beginning of day yesterday. The turnover went into double digits yesterday itself and we saw 11.9 lakh crore turnover yesterday. The open interest markers changed rapidly yesterday and we have 10400 put having the highest open interest followed by 10500. But even 10800 and 10700 are not far behind and yesterday’s action was mostly out of panic. So, we need to see how things shape up today. On call side however 11000 call has the highest open interest. 
What is the Nifty call for the day?

A positive Asia means we will open in 10870-10890 zone which is exactly where we were on Monday evening. That means all the negativity and fear surgical strikes effect is removed. Market now believes that surgical strikes are behind us now and for the time being we might see a relief rally, but since its expiry, caution is advised. If 10850-10880 range is protected in the first hour then it is advised to go for a long position with 50-60 point target margin from wherever you take the position. The upside extends upto 11000 but any adverse news from borders can upset the equations. So, I suggest that you take these positions in March series instead of Feb series so that you can get the benefit of time. For those who dont want to take any risk, you can stay out today also if you wish to.

Market Trade Setup 26th February #Nifty

All the positivity that Nifty has created by going up the 20, 50 and 200dma and closed above them is gone today morning. Yesterday, we had Nifty moved ahead of all the three resistances and braced itself for 11000. So, 11000 was just a matter of time and in this series itself, we would have reached there. But today everything has changed. But before going to that, the US markets have closed on a positive territory up 60 points and today Asia was in green till the news of Indo-Pak tension surfaced. Brent crude which touched 67 dollars yesterday also has come down to 64.5 dollars after President Trump issuing a stern warning that the Crude prices were too high.
Coming to domestics, looks like the worst has happened. Something that India never did in the last 45 years seems to have happened last night and early morning today. It is reported that multiple Indian Airforce Jets have crossed the Line of Control and entered PoK and seems to have hit Jaish e Mohammad targets there. There is no information on the extent of the damage. Indian Airforce seems to have hit multiple targets along the Balakot area. Pakistan also has confirmed it and said that India has intruded its airspace. This had a telling impact on SGX Nifty which was 50 points up at 7.30am today and now at 8.10am, it is down 80 points, which means 130 points were lost in 40 minutes. All Asian markets have gone into India. This news will continue throughout the day and all this means uncertainty.
Coming to derivatives, the activity on Options is going up with the turnover of Derivatives to 6.2 lakh crores out of which 4.7 lakh crore came from the Index options. The demand for puts was more than calls and as the Nifty was going up yesterday and the Nifty put-call ratio went up to 1.46 from 1.36 seen at the beginning of the day. 10800 put added maximum open interest of 11.4 lakh and now 10800 is close to 10700 put in maximum open interest. 10700 put has 35.4 lakh positions while 10800 put has 34.2 lakh positions. On the call side, 11000 call still continues to have the highest open interest.
What is the Nifty call for the day?

Everything today depends on what kind of news we would get from border and what steps Govt takes all through the day and the kind of statements it make. Pakistan is already active and tweeting that they were able to scramble Indian jets and they are going back. Today we would open 80-100 points down as of now and that means we will be at 10800-10820 mark and 10750 might be the support on the downside. Today there is no trade and just watch what happens at the border so that we can decide about the trade tomorrow.

Market Trade Setup 25th February #NIFTY

The last week of the shortest month of the year is here and we are into the expiry week, but the expiry weeks don’t look like how they were before as weekly expiries have taken away a lot of steam and excitement from the expiry series. Dow Jones had a fantastic Friday and it ended 180 points higher which means the Feb month so far added 4% gains to Dow, which is highest amongst the developed markets. This is mainly on the news that Trump decided to put off hikes on the tariffs from China that he wanted to impose from 1st March. That has also rubbed off on Asian markets and all of them are looking very green especially China which is up close to 2.5% and Hong Kong is up close to 150 points. The only worry, however, is Brent Crude which is now at 67.1 dollars and not showing any signs of cooling off.

On the domestic front, looks like we are now in the election mode, though the official notification on polling dates are likely to come early next week. Prime Minister has announced the transfer of 2,026 crores into more than 1 crore bank accounts of farmers with less than 2 hectares of land. Approximately 12 Crore farmers are coming under this and it is a fully funded project from Central Govt costing it 75,000 crore. Another big news is the reduction of GST rates on under construction flats. The premium flats which were taxed 12% before will be taxed 5% now and the affordable housing which was taxed 8% before is going to be just 1% now. A big boom for the home buyers especially in the affordable housing which is a two bedroom house in metro and 3 bed room house in non-metros. You can see a huge jump in real estate stocks today.

Coming to derivatives, this is an expiry week and going by the open interest we are more or less likely to be in the 10700 to 11000 range which is going to be the support and resistance. 10700 put has the highest open interest on put side at 35.7 lakh positions while 11000 strike has the highest open interest on the call side at 41.1 lakh positions. On friday 10800 put added 2.7 lakh positions and 10950 call added 2.1 lakh positions followed by 10800 call that added 1.7 lakh positions. As a result, the Nifty put-call ratio remained almost constant at 1.36 vs 1.38 seen at the beginning of the day on Friday. The turnover was at 4.64 lakh crore on Friday which was 25% of the 15.3 lakh crore seen on the expiry day on Thursday.

What is the Nifty call for the day?

Most of the month went in staying away from the market and now we are left with just 4 trading days to expiry. Today we are likely to open around 10780-10800 zone and 10750-10780 should be the support and we have the resistance stretching from the 20dma at 10810 to 50dma at 10820 and 200dma at 10860. These are 3 strong walls that Nifty has to climb. So, I suggest you to take a long position if Nifty drops below 10780 but above 10750 with a target of 10810-10830. These are small and tight targets that can be taken if 10750 is protected in the first hour. Added to this, traders also can go for a put buying simultaneously with the long in futures and it should act as a hedge to the long position that you are taking.

Market Trade Setup 21st February

After 8 days of continues fall, finally we saw a sharp rally yesterday, especially in the last hour and what we saw was a 130 point rally that took Nifty above 10720 and closed at 10735. For the last 2 days, I was talking about Nifty conquering 10700-10720 mark and that finally happened yesterday. The options data from the weekly series of Nifty also indicated 10800 as the roof and we are going there. Globally things are looking fine with Dow Jones closing in 60 points positive zone but the Asian markets are trading in the mixed zone with Hong Kong in mild positive while China and Japan are in mild red. The bad news is on Brent crude which has climbed to 66.8 dollars and now a touching distance away from 67 dollars.

On the domestic front, the Pulwama news is digested, the people responsible were eliminated and the market seems to have put that news behind. The big news, however, is the PSU bank recapitalization that was announced and that has led a rally in many PSU banks with IDBI bank going up 3% and SBI, Canara Bank and Syndicate bank gaining between 2 to 2.5%. Corporation bank and Allahabad bank got the highest recapitalization of 9000 Cr and 6900 Cr respectively. Let’s see how these two stocks react today.  On the technical side we have crossed the 100 days moving an average of 10690 yesterday and next, we have the 20 and 50 days moving an average of 10820 and that will be a resistance point to watch out for.

On the derivative front, today is the weekly expiry for the Nifty and yesterday itself we have seen a lot of reaction with 9 lakh crore turnover on Index options and the overall derivative turnover of 10.1 lakh crore. We have to see if we can see another 20 lakh crore turnover or not today. 10600 put has the maximum open interest of 15.3 lakh positions and 10700 also has 11.9 lakh positions so today if we break 10690 by chance then we have the chances of going to 10620 mark. On the call side, 10800 is a firm resistance and that would be maintained at any cost. For the monthly expiry series the Nifty put-call ratio yesterday jumped from 1.11 to 1.30. I had indicated that there would be a rally, as the PCR has gone really low. 10400 put and 11000 call continue to have maximum open interest for the 28th Feb expiry.

What is the Nifty call for the day?

Yesterday, I was talking about a mild rally which can take Nifty to 10700-10720 mark and what we got was a rally that took Nifty to 10735 mark. If you had taken positions yesterday, you would have made mild profits and would have closed the positions yesterday. If you had not taken any position, strictly following my advice that 10650 was not reached, then no problem, today you will get an opportunity again. A mildly red Asia and rising Brent Crude prices mean we will open a bit down today around 10670-10690 mark and that presents you with a fresh opportunity to enter into a long position again. Make sure that Nifty doesn’t fall below 10650 mark till 10.30 then go long around 10680 mark with 10730-10750 as a target. If by any chance the target is not reached and Nifty stays above 10660-10680 mark then keep your positions intact and take it to tomorrow.

Market Trade Setup 15th February 2019 #Nifty

A tough week is coming to an end with a very sad news coming from pulwama where 44 of our brave soldiers were martyred in a suicide attack of terrorists from across the border. India has promised a befitting reply at a place and time of its choosing. This brings a lot of uncertainty into the market which will be worried about the kind of reaction and its consequences. Globally also things are not looking good where growth fears are back again and Dow Jones lost 100 plus points last night. Asian markets are in red with Hong Kong down 400 points, Japan down 250 points, Shanghai and Korea in mild red and only Taiwan in flat to green. Brent crude is also a cause of worry which is now at 65 dollars which in a week gained 4 dollars. 

Domestically, Yes bank was a star performer yesterday with a largest ever intraday gain for itself of 31%. Imagine a stock going up 31% on a single day, that’s what one clean chit from RBI can do. Another positive we can look forward to is the Jet Airways restructuring plan. Finally a restructuring plan seems to have worked out where the majority of 51% of stake in Jet will be held by the promotors and Naresh Goyal whose stake is 51.5% now is like to come down to 25% and Etihad which has 24% stake is likely to come down to 12%. Q3 results seem to be mixed with Nestle disappointing again, for Nestle which follows calendar year its Q4 results. Pharma company Glenmark was a relief which reported 11% rise in sales while MTNL, Jet Airways, Voltas were a disappointment. 

On the derivatives front, yesterday was Nifty weekly expiry and there was so much selling yesterday even in the monthly series that the long positions which were at 55% came down to 49% by evening. This is something which is very rare. Contrary the Put call ratio went up to 1.35 from 1.29 on the back of short put positions that got created. The first weekly expiry on Nifty and Bank Nifty clocked 15.89 lakh Crore turnover which is almost equal to the monthly expiries. So, the expectations that volumes will go up has actually come true. 10600 put added 3.8 lakh contracts and 10700 put added 3.5 lakh positions and 10700 put now has the highest open interest which means 10630-10650 is the support for this month. On the call side 10800 call added 8.2 lakh positions and 11000 call has the maximum open interest. 

What is the Nifty call for the day?

Today is Friday and the cues across the globe are not that good. Even the domestic situation is challenging with market worrying what kind of retaliatory action India will come up with in pulwama. Brent crude also is at 65 dollars and all that means we will open in 10740-10760 range and we need to see if 10750 holds or not. If 10720-10750 doesnt hold and Nifty slips below that before 12 then its a warning sign to stay off. I know that you have not traded for almost a week but these are testing times and we need to hold on and wait for the right opportunity. If by 3PM also Nifty manages to hold 10720-10750 then you can venture into taking a long position, but remember that a lot can happen over the weekend in Kashmir which will have an impact when we open again on Monday. So, its all looking very risky indeed.

Market Trade Setup 1st January 2019, India #NIFTY #NEWYEAR2019

Market Setup 1st January 2019

Firstly, Wish you all a very happy New Year 2019!! May this year give you prosperity and a lot of good luck needed for making profits. We ended 2018 with a lot of uncertainty and nervousness and 2019 starts off on an anticipatory note. Globally there are many issues facing the globe and if we see growth is the biggest of them all. There is a big fear that 2019 might usher in a slowdown which might turn into recession by 2020. For the US the biggest hurdle to sort in 2019 is the Fed vs Govt showdown on interest rates and if there is a consensus reached then things can improve. Next big worry is the China vs US trade wars and expectation is that there can be some agreement between Xi and Trump that can put to rest this unnecessary trade wars affecting both US, China and Asia. 

Coming to India, 2019 is probably the most crucial year of this decade, much more important than 2014. In 2014 by February there was a consensus that we will have a new Govt that is stable. But as of now, BJP looks weaker than what it was in 2014 and there is a lot of political uncertainty looming. If there is no stable Govt at the centre by May then we might see a very long phase of bear market extending possibly till 2022. The other important thing is the reforms in the banking sector that needs to be done. We outperformed the global markets for 2018. Though all major markets ended in red, we ended 2018 with a gain of around 4% and this was mainly due to Crude prices, financial sector reforms that were undertaken. Thirdly we would surely want the Crude to stay below 60 dollars or entire 2019. So, three things that define, are political stability, financial reforms and crude prices.

Yesterday very low volumes were seen and throughout the day the markets were gravitating between 10900 and 10850 levels and closed flat at 10860 levels. 10700 put added maximum positions of 4 lakh contracts while 10900 put added 2.3 lakh positions while 10800 put added 1.9 lakh contracts. 10500 put still has the maximum open interest of 33.1 lakh contracts while 11000 put is second at 20.3 lakh contracts. On the call side, 11400 call added 3.6 lakh positions while 11300 call added 3.3 lakh positions while 10900 call added 2.7 lakh positions. 11200 call has the highest open interest of 28.2 lakh contracts while 11000 call is second with 26.4 lakh contracts. So, the market is looking t 10500-11200 for now and 11000-11200 in the near term.

What is the Nifty call for the day?

Today will be a flat to positive start day between 10870-10890 levels and again 10950 will be the resistance for Nifty like yesterday. I had given a revised target of 10950-11000 level yesterday and if you want to you can take it there or otherwise you can close your positions when 10950 is reached like yesterday and go home with profits. Today there won’t be much of participation from anyone and the volumes will be extremely low.