Market Trade Setup 1st November
November starts on a very good note. The worries of RBI have been temporarily put to rest. A storm in the tea cup caused mainly by media has taken away 100 points and added 200 points to Nifty by the end of the day. As we step into the winter month of November, things are looking up but how long will it stay needs to be seen. Dow Jones closed more than 240 points up last night adding more than 650 points in last two days and today morning Asia is looking green with Hong Kong up by 400 points and so there is no worry for Nifty. Adding to this is the fall in Brent Crude will be furthermore positive to India. Brent Crude is now below 75 dollars trading at 74.7 dollars.
Coming to domestics, its the Q2 results are in the forefront now. L&T declared fantastic Q2 numbers, putting rest to any problems in the engineering and construction sector. Added to this are the positive numbers from ABB another engineering company which gave good results. On the banking front, Canara bank declared good results and nicely followed up Bank of Baroda which also declared good numbers. Added to this is the news of ease of doing business report that came yesterday showed India jumping 23 places to reach 77th place from 100th place. 6 out of 10 indicators have shown improvement with construction permits showing the maximum jump. The worst performing indicator was however tax payments.
Another fundamental that we face is the October Auto sales numbers coming today and tomorrow. 4 wheelers are set to drop their growth due to subdued festival demand. The main reason is the late start to festival month this year. Added to this is the high petrol and diesel prices which reduced the demand. The passenger cars segment is likely to show a low growth of 4% while two wheeler sector is expected to perform slightly better showing a 10% growth. Maruti is one company we need to closely look at as any drop in the sales will affect the stock price. Hero and TVS in 2 wheeler space will be in focus today, so is Eicher and everyone will look at the sales of Royal Enfield during festive month.
Following are the Q2 results expected today
3. Apollo Tyres
4. Bajaj Electricals
7. Godrej Properties
8. Hindustan Petroleum
9. Taj GVK
10. Tata Communications
11. Thomas cook holidays
On the derivatives front, yesterday was a day when there was an all round buying when nothing happened on RBI front. The long positions on Nifty futures jumped from 32% to 34% during the mid day and the premium on futures also went up. The options market also showed bullishness with Nifty put call ratio jumping to all time high in this series of 1.55. 10300 put added 3.1 lakh contracts, 10200 put added 2.6 lakh contracts while 10400 put added 2.8 lakh contracts and 10000 put added 2.5 lakh contracts indicating that base is now getting built around 10000 and 10200 level. On the call side 10900 call added 3.6 lakh contracts.
What is the Nifty call for the day?
Lots of positive cues will make Nifty to open gap up above 10400 levels near 10410-10420 zone. I am looking at a positional call today because the risk reward might not work positively for an intra day trade. Yesterday’s intraday trade would have worked fantastically for you and at any point you would have got your 50 point profit. Today you could look for a dip towards 10400 during any part of the day and look for a positional target of 10500 to be achieved anytime in next few days. If you dont get an opportunity to enter today then I would advise patience. If Nifty closes below 10450 today you will still get a chance to enter the market tomorrow also. But dont take long positions beyond 10420 as the upside might be limited today.