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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 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 Setup 17th May

Markets and News
Very confused to day to start with. There is confusion every where, in US, Asia and even in India. The fundamentals in US are not looking fine but the Dow closed in positive zone up around 60 points. Brent Crude touched 80 dollars and came back to 79.3 dollars and Morgan Stanley puts the Brent Crude at 90 dollars and that can never be good for an emerging economy like India. The US bond yields are at 3.1% which is a 7 year high and rupee has stabilized a bit yesterday and closed below 68. Asia is extremely flat and showing no direction.
Domestics!
On domestics, the biggest fundamental is the karnataka election which is still in the news and today Yeddyurappa will be back as CM and that could be seen as positive. But the governor’s actions are under scrutiny and hearing is still going on and that might keep the market nervous though today no such thing might affect it. The big news is the positive Q4 results of Tata steel and that could lift the sentiment a bit.
Following are the Q4 results expected to come today.
1. Adlabs
2. Bajaj Financial service
3. Central bank
4. Coffee day
5. Escorts
6. JK tyres
7. Kirloskar India
8. Taj GVK
9. Voltas
Derivatives Action
On the derivatives front, there was a lot of action on the futures space as the sentiment started to change to sell on rally rather than buy on dips. Every up move led to the creation of short positions and that got reflected on the options market as well where the nifty put call ratio went down to 1.56 because of unwinding on puts happening since 2 days. 10800 put unwound 7.8 lakh positions followed by 10500 put that unwound 5.3 lakh positions. 10900 put also unwound 2.9 lakh positions while 10800 call created 2.6 lakh contracts and 10900 call created 2.4 lakh contracts and 11000 call 2.4 lakh contracts. As of now 10900 call premium at 30 rupees indicates 10930 to be the temporary top with a chance of Nifty going to 11020.
What is the Nifty and bank Nifty call for the day?
Today is the Bank nifty weekly expiry and it is close to 26200 mark. Bank Nifty is very volatile and any move could upset the premiums a lot. I suggest you to stay away from the Bank Nifty for today also but if you feel that intraday trade might help then you can look at buying 26200 call with a tight targets as any delay means premiums will drop.
On the Nifty front, Nifty is likely to open flat around 10750 and I suggest taking a long position of Nifty around 10750-10770 levels with 10820 as the intraday target. Exit positions for whatever profit as taking positions home is very risky as any adverse judgement on Karnataka could upset all the calculations.

Market Setup 29th January

Markets and News

After a 3 day break we are back again. Friday was a fantastic day on US and Asia and that has kept those markets up. The macro numbers from Japan have been very encouraging and that seems to have rub-off on the other markets also. Asia is full green today and one good news from Japan is that it has crossed that bearish levels that it has reached in early 90s and the 25 plus years of bear market and a bearish economy finally seems to have come to an end. But the only worry is the Brent which is still trading close to 71 dollar mark.

Domestic Cues

On the domestic front, there are many cues to start with in this week. The final full fledged budget of this Govt is coming on Thursday and that will change the course of the market. But the most important event for today is the Annual Economic Survey that would be tabled in the Parliament at 12 noon today. It will have a lot of insights on the performance of the economy in last 1 year and will give some insights into the Q3 GDP coming at the end of the year. The other big fundamental is the Q3 results of the companies and they seem to be on the right track so far.

Here is the list of Q3 results expected to come today.

1. Century Textiles
2. Emami
3. HDFC
4. IDFC
5. Inox Leisure
6. Indian bank
7. RBL bank
8. Reliance Communications
9. Subex systems
10. Tech Mahindra
11. Wockhardt Pharma

Derivatives Action

On the derivatives front Today is the start of the new series and after a 600 plus point gain for January series February series starts very heavy with 77% of positions getting rolled over into this series. This series is also going to be a very volatile series and also the shortest series with just 25 days! The expiry is on 22nd Feb which is the earliest. The series is going to start on a fantastic note at 11100 level and if the things go according to plan, then 11500 is something that we will see in this series. On the downside if there is a post budget correction then the market might touch 10700 levels before picking the steam back. This is a series that will have fundamentals laying as much role as technicals and in this kind of volatile series traders are expected to use Straddles and Strangles to the maximum and 11050 long straddle can be taken sometime at the beginning of the series.

What is the NIFTY call for the day?

On Friday we had a 3PM move that has happened on the upside and on Friday we were not trading but SGX Nifty was trading and it was positive due to global factors. So, today’s open will be a huge gap up around 11100 levels and might reach another all time high. But what happens after that needs to be seen. The correction could take Nifty back to 11050 levels and once it goes there buying can happen. The day will be bit volatile and the macro economic survey might take the Nifty to as high as 11130-11150 levels. So, the strategy for the day is to buy the dips at 11050-11070 zones with 11130-11150 as the targets intraday and 11200 as the target for next 2-3 days.

What is the Bank Nifty strategy for today?

This is the budget month and Bank NIFTY will be impacted maximum with this. So, from today I have started the new section of Bank Nifty call. One more reason is also because of the growing importance of Bank Nifty. The Thursday expiry also pulled Bank Nifty up and it closed almost 0.2% up when Nifty closed marginally down. Bank Nifty today will start its 1st Feb expiry series and 1st Feb is also the budget day. 27400 is a very important strike to watch out for. Wait for my twitter calls on what to do in Bank Nifty but for the time being, taking a long position around 27400 levels with 27550 as the target will be a wise thing to do!

Market Setup 8th January

Markets and News!

Start of the 2nd week of January and things are looking much clearer than what they were looking last week. Last week new year started with a scare of Nifty losing 100 points and then it went into a range and was threatening to go below 10300. Now, things are looking much better and brighter. On Friday, it broke the range of 10400-10500 and closed above 10550. That means we are now poised for that 11000 mark earmarked for budget. Globally also things are looking good with US closing at another all time high and Asia also looking greener today. Brent crude however is moving around at 68 mark and NIFTY is in no mood to look at that now.

Domestics!

On the domestic fundamentals front, we got the advanced estimates of GDP figures on Friday evening after markets closed. GDP is estimated to be at 6.5% which is a 4 year low and GVA is expected to be at 6.1% which is something we last seen in 2013. On any normal day this should worry the market. But what is happening is people are just rubbishing the data. CSO said that its just extrapolating the data it got from April-October to November-March and coming up this figure. Now that simple extrapolation works in normal situations not in the disruption months.
Last November we had Demonitization and that disrupted many things and their base got lower. That includes cement, steel, unorganised sector manufacturing, Q3 and Q4 data of companies etc. On the lower base this year’s figures would look better. So the extrapolation wont work. Second is the introduction of GST in July 2017. That has changed the tax collections a bit and how they behave can’t be predicted through extrapolation. Third is that Govt spending was calculated assuming that fiscal targets would be sacrosanct. But we already know that Govt has exceeded fiscal target to 112% by November itself. So public administration which is put at 9.3% will be higher than that. So, markets are not giving much weightage to these numbers.

Futures and Options!

On the derivatives front, there was a lot of call buying that happened along with put selling. This is a bullish sign. But on the futures side the shorting still continues hoping that something will go wrong and that brings the Nifty premium to 14 points from 47 points seen on 1st January. There was buying happening at 10600 and 10700 call now and the premium surged to 90 and 50 rupees there. And on the put side there is shorting now happening at 10600 put which has a premium of 115 rupees and 10500 put that is at 80 rupees. That puts 10420 as a firm cap. Nifty put call ratio is at 1.58 up from 1.54.

What is the Nifty call for today?

If you have followed my suggestion and taken a long position on Nifty anywhere between 10520 to 10540 you would reap benefits now. Nifty will open gap up and it could open close to 10600 level which is a new all time high and that might present as a temporary resistance. If Nifty breaks that then it can go till 10650 intraday else it will trade between 10560 to 10610 and might close in between. I will give you a call on twitter based on how things work. Till then hold on to your long positions and enjoy the profits!

Market setup 6th December

Market and News!

Not a great day to start with. Global cues are negative on the crude supply cut and brexit worries, Asia is following it up by giving up its gains. India has its own worries. Yesterday it was the scare of BJP losing Gujarat, today its the monetary policy that comes up in the afternoon today. The expectations are bare minimum this time. The policy is expected to maintain status quo. The chances of rate cut is 0% and so this is going to be the dullest policy. Last 1 year RBI didn’t want to cut rates because of the crude prices and inflation going up because of that.

Crude and Macros!

Now that Crude finally crossed 60 dollars and inflation crossing 3.5% RBI now will be very cautious. The only thing that needs to be watched from this credit policy is the tone of the policy and the GDP outlook. Last time the GDP outlook was lowered from 7.3% to 6.7% for FY18 but now that also looks unlikely. With Q1 coming at 5.7% and Q2 at 6.3% we need to clock 7.25% each in Q3 and Q4 to get a 6.7% annual GDP. That is almost looking impossible. So we can expect the GDP forecast to be lowered to 6.6% or worst 6.5%.

Another aspect that could be addressed in this credit policy is the fiscal deficit for FY18. India has committed for a fiscal deficit of 3.2% of GDP and with 97% of it hot by the first half of FY18 itself, we can see that the fiscal deficit target could be re-revised to 3.5% or near about that. The third point is the tone of the policy which provides insights into the future policies and according to my view the tone is likely to the neutral to hawkish and that would not be taken positively by the market. The thing to be noted also is the bond rates and dollar rupee value. That needs to be carefully observed during and after the policy.

Futures and Options!

On the derivatives front, there was a massive selling seen yesterday, though it was not aptly reflected in the index, due to DII buying in the cash market. FIIs sold close to 15000 Cr worth NIFTY futures and that had a huge impact on the market. Even the options market also has borne the brunt of the bearishness. In the options market 10100 and 10200 call are now being sold. 10100 has a premium of 170 points and shorting that is indeed dangerous that too this early. We have also seen put buying happening at 9900 put, indicating extreme bearishness. The put call ratio as a result of that moved to 1.16 from 1.29 seen at the beginning of the day.

What is the NIFTY strategy for the day?

NIFTY might open down again around 10100 levels and you need to see where it goes from there. 10070 to 10120 is a zone where it can move till the policy and its the tone of the policy that decide the future of the market. Risky traders can short market before policy at 10100 zone and keep a 2-3 target for it. Do not worry what happens immediately. But its too risky and 10000 can be reached today if things get awkward.

Market setup 27th November

Markets Outlook for the day!

Start of the expiry week, and that’s not starting on a great note. The S&P upgrade or at least a revised outlook to positive was expected. None of these were to come. That would add to the disappointment. Added to that is the weak Asian markets which might keep the markets down. The biggest impact because of the S&P status quo is the bond yield which will be likely to be above 7% throughout the day. Remember, we have compromised 10,000 Crore OMO to keep the bond yields down and now they are again above 7% and that sacrifice of OMO has gone waste. The main reason for S&P to keep status quo on India was the fiscal deficit and the crude oil prices that are fluctuating.
Domestically also things not looking fine. ABVP loses Gujarat university elections, that gives the mood of the state that goes to polls in less than 3 weeks. GDP figures that are going to come later this week on Thursday will have to add cheer to other dull market. No positive domestic cues are there to lift the market. Bond markets and bank nifty are the two main casualties because of these trends.

Futures and Options!

On the derivatives front, there was exact opposite action to the mood now. Everyone was expecting S&P to give a positive outlook at least and were buying hugely. There was a lot of buying in Futures markets and many interesting positions were taken in the options markets. Picture this: 13 calls were bought for every call sold and 5 puts were sold for every put bought. That was a big bullish sign. 10,600 call added 1.17 lakh long positions followed by 10500 which saw unwinding of all previous shorts and 2.46 lakh long positions were added. Now with NIFTY correcting all these positions will see a massive sell off. The put call ratio surged to 1.46 from the 1.34 levels seen at the beginning of the Friday. Maximum positions were the shorts created at 10300 put where 3 lakh contracts were sold at 20 rupees premium. This position will run for the cover today.

What is the NIFTY call for the day?

A gap down is guaranteed. NIFTY will open below 10350 and 10320 is the 20 day moving average. If that is taken out massive downside will open with 10250 being the next support. As the S&P disappointment and Gujarat nervousness weighs heavily on the market, its not going to be a good Monday. Going short anywhere between 10350 and 10330 with a target of 10260-10280 can be looked at for the near term. There will be unwinding of positions taken on Friday, and since most of them are bullish we can see lots of bearish action for the day.

Winter, Wheat and Weather Derivatives: Will we touch 100 million in 2018?

Winter, Wheat and Weather Derivatives: Will we touch 100 million in 2018?

9 out of 10 people when asked to name their favorite season will either choose Rainy or Spring or Summer. Winter is least preferred as it is biting cold and doesn’t appeal to many. Many of us want Winter to complete as soon as possible unknowing the fact that how important is Winter for Indian Economy and for the livelihood of crores of Indians. Today I will talk about why we should all keenly observe climatic conditions in Winter just like the way we are worried for high temperatures in Summer and High Rainfall in Rainy season.

Winter is the very important season as it is marks the start of Rabi crop.

Rabi crop is the one which starts in the month of October where the sowing of major crops happens. Rabi Crop falls in winter and it requires warm climate for germination of seeds and maturation and cold climate for the growth. The Major Rabi crops grown in winter are Wheat, Oat, Gram, Pea, Barley, Potato, Tomato, Onion, Oil seeds (like Rapeseed, Sunflower, Sesame, Mustard) etc. Each item listed are very much in demand in India and are consumed in heavy numbers. The highest consumed crop of the given is wheat. India’s wheat production is majorly dependent on the Winter and the production is seeing good increase year by year.

The total production in 2017 in India is 9,83,80,000 Metric Tonnes, thanks to good rainfall and good winter in the country last year. That is 9.83 Crore metric tonnes or 98.3 million metric tonnes. Will we touch 100 million this year? That’s the million-dollar question.

‘’For a Rabi season to give good crop it is most required that the temperatures before sunrise needs to be below 10 degrees and temperatures after sunrise should stay below 20 degrees’’

This kind of climatic pattern with normal rain will prove the best for Rabi Crops. At the time of harvesting it’s very important that crop should receive mildly higher temperatures which gives good harvest.

Not all the states in India produce wheat. The major part of wheat production comes from Northern Indian states. South Indian states are completely out of wheat production.

Top Wheat Producing States in India

  1. Uttar Pradesh
  2. Punjab
  3. Madhya Pradesh
  4. Haryana
  5. Rajasthan
  6. Bihar
  7. Gujarat
  8. Maharashtra
  9. West Bengal
  10. Himachal Pradesh

India’s overall production of wheat was just 10.3 million tonnes in 1966 which more than doubled to 23.2 million tonnes in 5 years by 1971. This was primarily due to green revolution. The increase in the transportation facilities has increased the consumption of wheat and by 2000 we were producing 76.3 million tonnes. By 2017 the figure touched 98.3 million tonnes.  The per capita consumption of wheat per household in 1966 was 8.5kg/month which went up to 17kg/month per household in 1971. The consumption went up to 31kg/month per household now. This is a tremendous increase mainly due to changing food habits.

The pizza, burger, roti and naan you eat are all wheat products and privatization has happened in wheat procurement and distribution as well as cultivation. Soon it will be linked to weather patterns and will be on Derivatives.

Future for Weather & Weather Derivatives in India!

Like we have seen much growth in sectors like Education, Banking, Software etc.; over the years. Weather is going to be next big thing and predicting weather will be the game changer.  The future looks bright and like we haven’t seen so many sub sectors years ago which are doing fantastically now even weather as a subject will grow and start a revolution.

This will also bring in the most awaited derivatives in the market and that is Weather Derivatives. People will then be able to trade on the Weather Futures & Weather Options. We will have newly designed contracts on weather temperatures, wind movements, production of the crops and many more. Like this a new dimension will be added to Indian Secondary market. These kinds of things are not easy to learn but are of huge importance to any Finance Student.

More on it in my future posts!!!

#Weather #Winter #India #LearningContinues

Nifty Records All time High – 10191

Today am going to talk just fundamentals and tell you where the NIFTY will go next Diwali in 2018!!

Today Nifty hits the new all-time high of 10191!

Last Diwali we were at 8600 and this year with Diwali just a week to go we are at all time high of 10191. The cheer from banking sector, inflation and production has taken nifty out of worries. It is now placed well and all set to take on longer bullish journey. So, by the time we reach Diwali this year we might hit 10,300 or near about! On that day I am going to talk about the investments to be made from this Diwali to next Diwali. Now for today am going to take you step by step different points NIFTY will cross in next one year!

What next for Nifty and Indian stock markets?

The first important thing that is coming up as biggest test for Narendra Modi is the Gujrat Elections in December. It looks to be easy throne to retain for BJP and that cheer will take Nifty to 11,000 by end of the year.

New Year is always a buying time and many people make new investments and profit booking. That way we can see small hiccups but could still be somewhere close to 11,000-11,100 and the Pre-Budget will push the Nifty to 11500. Pre-Budget rally will happen from mid of January to first week of February as Budget is scheduled to be released in first week of February. So, by end of February we can expect the 11,500 to be held.

Next stop is in April.

Nifty will then track Karnataka elections and see whether Congress can retain their last big state or will the congress mukt bharat be completed with Karnataka loss? Recent polls show that BJP will win it with simple majority which will be another good positive trigger for Modi’s Mission 2019. This Victory will take Nifty to 11,800 to 12,000.

We now have Earnings of the companies coming in and GDP coming for the fiscal year 2017-18. With macro factors picking up we can expect good GDP figures and that will keep the Nifty moving up. From May till Diwali in November in the gap of 6 months there are no elections. So, it will be the economic factors and Earnings that will act as big boost. Then we will see a massive 1000 points up trend in 6 months to end at 13,000 on Diwali 2018.

So, from 10,300 to 13,000 is a huge up trend that we are about to see. Wait for my Diwali post which will give you Diwali stocks that will surely increase by 25% by next Diwali.