Tag Archives: Rate Cut

Market Trade Setup 7th February #Nifty

Market Setup 7th February

Yesterday I was talking about whether the Nifty will break the 10980 resistance or not which Nifty tried 11 times before. Finally, it was broken and broken emphatically. Now 10980 will be a support to watch out for. But the point is the break out has to sustain and today is the day we will see that. US markets closed flat last night with Dow Jones falling 20 points after a 170 points up on two days. The Q4 data is coming positive in US with important companies like General Motors coming with a good results. Asian markets are shut even today on account on Chinese lunar new year and Japan which is the only trading market is 100 points down. Brent crude is still at 62 levels. 

Coming to domestics, today is the monetary policy day at the mid day you will have market reacting in full measure to the policy. This is new Governor’s first policy and three things are important. First is the rate cuts, second the tone of the policy and third are the forecasts. On the rate cuts there is a very slight chance of a 25 bps rate cut, coming now or in April policy. The tone of the policy is going to be changed from calibrated tightening to neutral. And third the inflation forecasts are going to be revised to 4% for first half of 2019 and if all this happens markets will surely rally. Today’s Q3 results include Aurobindo pharma, Britannia Industries, Cadila health, Coffee day, MRF tyres, Suzlon energy and Tata Motors.

On the derivatives front, yesterday saw a fantastic action in the Nifty Futures market where a plenty of long positions were added as Nifty climbed the 11000 mark. There were 34 long positions taken for every short position and that brought the Nifty futures long positions from 46% at the start of the day to 52% by the end of the day. Now we have more longs than shorts in Nifty futures. On options front also the Nifty put call ratio surged to 1.82 from 1.68 level with 10900 put adding 12.2 lakh contracts and 11000 put adding 13.8 lakh contracts. 10700 put has the highest open interest and its closely followed by 11000 put. On the call side 11400 call added 2.2 lakh positions and 11300 call added 2.1 lakh positions. 11000 call still has highest open interest and we need to see whether 11200 call can gain some open interest today or not. 

What is the Nifty call for the day?

Today we will have a flat opening to Nifty around 11030-11060 kind of opening and with the put call ratio in over heated zone of above 1.8 we need to see if this level can sustain or not. 11000-11020 is a crucial support level and if it holds then we can look at Nifty going up to 11100 level. So, I would suggest you to wait for a dip to come around 11020 levels and take a long with 11100 mark as the target, either today or in the coming days. Understand that monetary policy is coming at 11.45 and if required wait till that point to see if 11000 holds or not before taking the long position. Don’t rush into it and get trapped, even if you take a position before 1PM also it is fine. The targets can be extended to tomorrow also if required. 

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.