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Market Trade Setup 5th February 2019 #NIFTY

Market Trade Setup 5th February 2019

A good Monday which saw the Nifty climbing the peak of 10900 and closing above that gives way to a challenging Tuesday. Today is all about whether the momentum gained late in the afternoon yesterday will sustain or not. The global cues are looking very positive with FAANG (Facebook, Amazon, Apple, Net Flix and Google) close 2% higher on New York Stock Exchange last night and Dow Jones closed 170 points higher. Today is the lunar new year for China and Korea and most of Asia except Japan and Singapore are shut. Those markets are absolutely flat. Brent crude is touching 63 dollars and that is a bit of a worry for our markets. 

On the domestic front, the Political factors are going to play their role as the 3 judge bench led by CJI is going to hear the CBI plea of contempt of court against the commissioner of Police, Kolkata. That will keep markets on tenterhooks and apart from that focus has now shifted back to Q3 results. Today’s Q3 results include Aditya Birla Capital, ACC Cements, Adlabs, Apollo Tyres, BHEL, Bombay Dyeing, Century ply, Dish TV, DLF, HPCL, Inox Leisure, Kamat Hotels, Punjab National bank, Sobha developers, Tata global, Tech Mahindra, Torrent power, United bank and Zen labs. So far the Q3 results have been average and we need to see how today, which has the core economic stocks come up with their numbers.

On the derivatives front, there was an equal amount of buying and selling that has happened in the Nifty futures market and the overall long positions in Nifty futures still remain at 45%. The futures market contributed 61,900 Cr turnover yesterday while options contributed 5.46 lakh crore turnover taking the total to 6.08 Lakh Crore. The Nifty put-call ratio also went up to 1.67 from 1.63. 10800 put added 5.3 lakh positions while 10900 put added 4 lakh positions. 10700 put still continues to have the highest open interest. On the call side, 11100 call added 3 lakh positions while 11000 call added 2.1 lakh positions and 11000 call still has the highest open interest. So, today is going to be interesting where we have to see if 11000 will be touched or not.

What is the Nifty call for the day?

Yesterday, Nifty behaved as per the script and if you have taken a long at 10840-10850 you are now sitting on a 60-70 point profit. Today will open between 10920-10940 range which is the resistance zone. The resistance goes all the way up to 10980 and there can be a correction at any place between 10940-10980. Unless it is crossed there is no point in taking fresh long positions at these levels. If you still have yesterday’s positions open close them between 10930-10960 levels and exit. No trading today and we will have to wait till the Nifty crosses 10980 and closes above that. Till then we have to wait and watch.