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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 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 point 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 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. Lets see how these two stocks react today.  On the technical side we have crossed the 100 day moving average of 10690 yesterday and next we have the 20 and 50 day moving 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 means 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 doesnt 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.

Market Trade Setup 17th December #NIFTY

Market Setup 17th December

The 3rd week of December is here and for many, the holiday season is just starting. The last 2 weeks of December is more about many FIIs going on a long Christmas-New Year holiday and their absence means India is going to be on its own and its own fundamentals. Globally, things are not fine. Dow Jones has fallen by more than 500 points and thus Dow has closed to a lowest level since May 2016. Asia is also not presenting a good picture with the industrial out put of China coming in at lower than expected at just 5.4%. This will surely send signals that China is weakening every quarter and that put some pressure on Shanghai and Hong Kong. Japan is up more than 100 points and other markets are just flat. 

Coming to domestics, almost all the macro data is out and the last data to come is the trade deficit data for the month of November is out and it is down from the October month. For the month of November trade deficit comes at 16.7 billion dollars with exports going up to 26.5 billion dollars from 26.2 billion seen in the same month last year. However the imports have risen by 4.3% to 43.1 billion. Oil imports came at 13.5 billion vs 9.5 billion in the same month last year while Non oil imports fell to 29.6 billion compared to 31.8 billion seen in November 2017. Apart from this, new Governments will be formed in Chhattisgarh, MP and Rajasthan today as te new CMs from Congress will take oath today. 

On the derivatives front, Friday was more or less flat with Nifty crossing 10800 level at the end of the day and the overall long positions still stand at 46%. On the options front, the put call ratio went up marginally to 1.53 and there was some demand seen on the put side. 10800 put added maximum positions of 4.52 lakh while 10700 put added 4.5 lakh positions. Apart from that there was minor addition of put positions at 10400, 10600 and 10500 puts. 10000 put still continues to have highest open interest followed by 10500 put and 10700 put. On the call side only 10800 call added 1.2 lakh positions and 11000 call still continue to have the highest open interest followed by 10900 call. Today’s market action will see if there will be any addition in 11100 call.

What is the Nifty call for the day?

I had asked you to stay out of market on Friday and it seems to have paid off as there was no way that you would have made money as Nifty was almost flat. Today we might open slightly positive around 10820-10840 zone and 10850 is a resistance that Nifty needs to break. If that is achieved we will go to 10970 level which is the big resistance again for this series. So, I suggest you to take a long position if Nifty sustains above 10780 zone with 10900 as the target for today or for this week. The absence of volumes in the market from FIIs means domestics will dominate and we might touch 10900 in this series.

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 1st November #NIFTY

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

1. Adlabs
2. Amrutanjan
3. Apollo Tyres
4. Bajaj Electricals
5. Berger paints
6. DLF
7. Godrej Properties
8. Hindustan Petroleum
9. Taj GVK
10. Tata Communications
11. Thomas cook holidays
12. Timex
13. Zuari cements

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.

Market Trade Setup 3rd September #Nifty

September starts on a note that it is known for. Septembers always have been cautious and no over-optimism or pessimism. That is why if you compare the last 3 years Septembers were always flat not getting carried away either by good news or bad news. Let’s hope that this September also behaves the same way. The US markets were flat on Friday and today they are shut on account of labor day so no big clues available. Asia is down on account of trade wars in Europe emerging slowly. Hong Kong is down more than 250 points and other markets were down anywhere between 0.5% to 1%. 

On the domestic front, the big news that will move the market today is the GDP number that came at 8.2% and the GVA number that came at 8%. For a 8% GVA if the tax collections were good then we would have seen a 8.3 to 8.4% GDP but 8.2% indicates lower tax collections which is a worrying point. Another worrying point is the drop in the services sector GDP has actually been lower than 8.2%. The good point is manufacturing that grew 13.8% and excellent numbers from construction and Agriculture that indicates that jobs are getting created in the unorganized sector.

The other domestics are the very good numbers that have come from the auto sales in August and this could be positive. Commercial vehicles grew very well led by Ashok Leyland reported 28% growth in commercial sales, Tata Motors commercial vehicles grew at 26% and M&M commercial vehicles sales went up 25%. Maruti, Hero and TVS saw a drop in sales due to Kerala floods. Now coming to the negative fundamentals its the strengthening dollar again where the dollar index crossed 95 and stands at 95.2 now. That means fresh pressure on Rupee and we might see Rupee tumbling to another all time low. On the other hand the Brent crude prices are still holding on and not showing signs of falling. They are still around 78 dollars per barrel.

Derivatives Action

On the derivatives front, the first day saw a massive short build-up in the Nifty futures and the percentage of Nifty long positions came down from 64% to 60%. On the options market also the shorts in the calls side is more than the shorts on the put side. But when it comes to longs, there were 2 puts bought for every call. The put call ratio now stands at 1.55. 11600 put added 7 lakh contracts and 11500 put added 5 lakh contracts and 11700 put added 3.1 lakh contracts. With this the 11600 put has the maximum accumulated open interest now and that means 11520 will be the new floor for the market in this series. On the call side 12000 call added 5 lakh contracts and 11800 call added 4.9 lakh contracts and 11800 still has the maximum accumulated open interest. At 100 rupee premium 11900 could be the new roof. 

What is the Nifty call for the day?

GDP numbers will make our markets open in green at 11700 levels and the long position you have taken on Friday at 11640-11660 will have a 40-60 point profit. First resistance might come t 11720-11740 zone and Nifty might correct to 11650 intraday after touching this level. So, it is better to exit the long positions as soon as 11720 is reached. The minimum profit you are guaranteed with is 50-60 points. As the market starts negotiating this positive and negative factors, stay out and see where it closes. Any close below 11680 is not good for the near term.

Market Trade Setup 30th August- Expiry Day Special #Nifty

Markets and News

Finally, the longest series is finally drawing to a close. A series that started with a lot of scepticism and worry is now coming to an end with most of the worries put behind and Nifty gained 4.6% in this series. So last two series has seen a gain of 1100 points on Nifty. July series has began at 10600 levels and today we are at 11700. This series started off on a all time high note when Nifty crossed 11170 high made previously on the first day itself. From then on it was an uptrend all the way as Nifty conquered 11200, 11300, 11400, 11500, 11600, 11700 and finally came to the summit level of 11750. Very rarely in a single series you will see these many all time highs.

On the fundamentals, there are some major worries to encounter today in the form of Rupee weakness and Brent Crude surging. The Rupee had a big fall yesterday and has seen crossing the 70.50 levels to go to as low as 70.65 to finally settle at 70.59. This is an all time lowest closing level for Rupee and now Rupee hitting 71 is imminent and coupled to that is the Crude now crossing 77 dollars and trading at 77.3 and this would mean huge pressure on the current account deficit. What impact all this will have on a expiry day needs to be seen.

Coming back to the expiry again, and it was 4-3 in the favour of bulls till July series. January, April, May and July went to bulls while February, March and June series went for bears. Now August series is on a 500 plus point gain and it is going to be 5-3 in favour of bulls now. The roll overs in the market is at 69% as on yesterday vs an average of 63%, Nifty roll overs were at 53% vs an average of 46%. The Nifty futures premium held on to 13 points and stayed above 11700 while Nifty spot came down below 11700 levels. So, F&O cues looks bullish.

On the Options market also, the high level of Nifty put call ratio which was 1.94 at the beginning of the day dropped to 1.84 at the end of the ay mainly due to unwinding of positions on the put side. 11700 put saw 11.2 lakh positions unwounded and 11600 put saw 4.1 lakh positions and 11500 put 4.6 positions was responsible for bringing down PCR. On the call side 11800 call has the maximum accumulated open interest of 31.8 lakh positions while 10750 call added maximum open interest of 10.9 lakh positions yesterday. 

What is the Nifty call for the day?

Yesterday’s options action shows that 11700 put has seen maximum shedding and today it might get a support there which means support will come to Nifty at 11680 levels on the down side and 11750 call added maximum open interest on call side and at 9 rupees premium 11760 is the roof for the market. Most probably the expiry might happen within these contours and if 11680 is broken the next support is at 11640 levels and 11600 levels. So, its the 3PM move that will decide whether these markers would be broken. You took 3 positions, all of them are making profits as of now and lets hope it stays that way at expiry. Good luck…..

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