Tag Archives: Stock Market

Market Trade Setup 19th October #NIFTY

Market Trade Setup 19th October 

Last day of the week but not great way to start with. I had told you on Wednesday to exit your positions and you would have pocketed more than 140 points if you have closed your positions till 10am. What we saw on Wednesday was vertical fall from open of 10710 to 10450. This is more than 250 point fall. Yesterday we were not trading but there was a fall across Asia and that will surely be priced in today’s opening.  The Dow Jones fell more than 200 points yesterday on the back of news from Fed minutes that the interest rates cycle will continue and fed will keep rising the interest rates in future also. 

There were other bad news as well for the market with dollar index going up to 96 and that means rupee will again go back to 74 level today and might hit another all-time low. Added to that is the China GDP data for Q3 which came in at 6.5% which is the lowest we have seen in the last 9 years. Last time China had 6.5% GDP was in 2009 when World was going through investment banking crisis. The result is entire Asia is in negative. The only good news is Brent crude which is below 80 dollars now trading at 79.5 dollars.

On the domestic front bad news for China is good news for India and Chinese GDP drop might pull FII inflows into India. Crude below 80 dollars is also good for India so it is not such a bad scenario for India. The only negative for us is not so good Q3 results.  HUL though the numbers were good the margins disappointed. Same is the case with Reliance which also showed some margins pressure and ACC cements also was not upto the mark. So if today’s results disappoint things might be under pressure otherwise things are not as bad as they look.

On the derivatives front was a massive selling that happened on Wednesday with NIFTY started to fall. The NIFTY premium which was at 5 points at the open ended into a discount of 10 points by the end of the day. The story is clear. A lot of bearish positions were built on Wednesday and a gapdown today means a lot of short covering that can be seen. On the options front the NIFTY put call ratio dropped to 1.11 from 1.20 on the back of increasing demand for calls. 10000 put and 11000 calls still stand as markers but expect that to change today.

What is the Nifty call for the day?

A gap down is expected and if nifty opens below 10400 then expect a short covering for all those positions taken on Wednesday which might take the market past 10500 and even as high as 10580. Adverse news might make nifty test 10300 levels. A day like this is better to wait and watch than take any positions. Weekend is always a time for less risk so no positions for today.

Market Trade Setup 8th October #NIFTY

Market Trade Setup 8th October

Start of the 2nd week starts and we are yet to recover from shocks of the first week. Nifty has seen the biggest fall in 9 years see at 6.1% and we have seen 700 points getting wiped out in a week’s time. If you see this week, globally things are looking mixed. The US is growing big time, strengthening the dollar and that is making all the other currencies weaker. The jobs data that came on Friday in the US shows that the unemployment rate in the US is at the lowest level in the last 49 years. China, the second largest economy in the World is going through some problems and the Central bank of China has decreased the CRR there to increase the liquidity in the economy, thus increasing the demand for loans. China is down by 1%, Hong Kong is down by 400 points and India will have some pressure of all this at the opening. 

Domestics and Derivatives! 

Coming to the domestics, the biggest jolt was given to us by RBI in our monetary policy on Friday, where the rates have been kept unchanged. The reason given was why should rates go up when inflation is not going up? This is a valid reason but a depreciating rupee needed higher interest rates to stabilize and since RBI did not hike rates to save rupee there was a massive sell-off in Nifty, which fell close to 290 points. For today, the biggest relief is from the Crude which fell from 86 dollars to 83.2 dollars and that might come as a huge relief. Apart from that the Q2 results season starts this week and Zee Entertainment will be the first company to declare results on Wednesday. 

On the derivatives front, there was a massive selling seen on Friday where 30 short positions were taken on Nifty futures for every long position. That has brought down the overall long positions in Futures market to 36% from 46% seen at the beginning of the series. On the options front, there was a lot of action on the call front and 7 calls were shorted for every 2 short puts and that brought the Nifty put-call ratio down to just 1.07 from 1.21 seen at the beginning of the day on Friday. 10200 put added 4.5 lakh positions while 10700 put shed 6.8 lakh contracts and 10500 put shed 8.3 lakh contracts, On the call side 10500 call added 16.7 lakh contracts, 10700 call added 11.2 lakh contracts and 10800 call added 14.5 lakh contracts. 11000 on the call side and 10500 on put side continue to have the maximum accumulated open interests. 

What is the Nifty call for the day?

After 700 point fall in 4 days, what can we expect? Nifty will open slightly gap down today around 10280-10300 level and immediate support will come at 10260 and what happens from there needs to be seen. 10380-10420 is a resistance zone and will Nifty overcome that or not needs to be seen. Today for me is a wait and watch day. After such big falls, its not safe to jump into trades now. Already you have a position and keep it intact and let’s observe the markets today to decide on the further course of action.

Stock Market Trade Setup 4th October #Nifty

Market Trade Setup 4th October

Ugly day, when you really dont want to trade if you are a bull. Being a bull, I feel like running away today and not writ this post but you have to do it as responsibility wont allow you to do so. What went wrong? Everything. US bond yields reach a 7 year high of 3.18%, Brent Crude has crossed 86 dollars, dollar index has crossed 96 and that would mean dollar is growing from strength to strength. The better than expected jobs data from US means increased rates are actually helping US economy to grow. The Dow jones is at a record high now.

If I have to explain you further, the risk free return in US has crossed 3.2% for an average global inflation of 2%. So, you will understand clearly that US pension funds and treasury securities are offering more than 1.2% of real interest rate for its risk free securities. That would mean, funds from everywhere will move to US and that means money will disappear from every emerging market including India and that explains why most of Asia is in red now. Hong Kong is down more than 400 points and in last 1 month it lost more than 2500 points. 

Domestics and Derivatives

On the domestic front, today is going to be real ugly with bond yields going up above 8.12% and could reach 8.2%. Rupee which closed at a record low yesterday will open around 73.70 zone and if things dont improve we might see a 74 on dollar and that would mean total disaster to equity markets. Added to that is the Brent Crude which is at 86.12 dollars now and that means all crude oil related stocks will be in deep red. So banks, NBFCs, crude related stocks everything is going to hit today and in this kind of atmosphere I dont know how much IT stocks can carry the market. 

On the derivatives front, things are horrible there and yesterday afternoon around 1PM itself the 10500 put has overtaken 10800 put for the maximum accumulated open interest. On the call side 11500 still has the maximum accumulated open interest. So, if you have a 1000 point band, Nifty could be exposed to wild swings. That is confirmed with Volatility index crossing 18% mark yesterday and it was at 15% just few days ago. The Nifty futures premium also has dropped a lot from 50 points to 32 points indicating a strong bearishness in the market. The Nifty put call ratio also dropped with demand for calls increasing, it moved from 1.41 to 1.36. 

What is the Nifty call for the day?

A huge gap down will take the market directly to 10770, which is the 200 day moving average and it might open below that at 10750 levels. What happens after that is difficult to guess because the next meaningful support comes at 10600 levels. Today Nifty might try to stabilize itself between 10720-10700 levels and might try to go to 10780 which is the 200 day moving average. I suggest to take a long call during the day or a long position in the futures and I would suggest what position to take during the course of the day.

Market Trade Setup 3rd October #NIFTY

Market Trade Setup 3rd October

Thank God we did not trade yesterday, thank god it was Gandhi Jayanti. Brent Crude went to a high of 85.45 dollars and dollar index went to 95.5 from Monday’s value of 94.5. That would mean Crude at 85.45 and Rupee would have reached 73.5 and that would have spelt disaster on Nifty and it would have lost another 100-120 points. But thank god, all this was saved as we were on a holiday. Today as we open things are bit settled with Brent Crude at 84.95 and Asia in mild green and Dow Jones closing 120 points so all this might put some losses to rest.

On the domestic front, things are not looking great here also. The GST collections for the month of August come at 94,000 Cr vs expected 1.1 lakh crore and that is definitely not a good news for Govt which is looking for some revenues to stick to 3.3% fiscal deficit. The auto sales for the month of September also has been disappointing on the back of lower demand and Kerala floods impacting consumptions. The 3 day MPC meeting to decide the monetary policy rates would be commencing today and on Friday we will have the rates coming out. The consensus estimate is a 25 bps rate hike.

On the derivatives front, Monday was a great day for bulls as the premium on Nifty futures has doubled from 28 points to 55 points and the overall long positions in Futures shot up from 46% to 48%. The options market also was going good with Nifty put call ratio surging from 1.33 to 1.41. There was more of call buying, with 2 calls bought for every put and in selling nearly 5 puts were sold for every 2 calls. 10700 put added maximum open interest of 10.6 lakh contracts while 10500 put added 8.8 lakh contracts taking the accumulated open interest to 30.3 lakh and 10800 put is at 31.9 lakh. Any drop in Nifty means the base for the market will shift from 10800 to 10500 which means we could go to 10500 in this series. Not a good sign. 

What is the Nifty call for the day?

Though Asia is looking green, we might open flat to negative between 10960-10980 levels because of yesterday’s trade not being there. What happens after that, with Crude almost touching 85 dollars and Rupee at 73 needs to be seen. Rupee for sure will open above 73 per dollar and soon we might see it going to 73.20-73.30 levels. That would put immense pressure on Nifty and Bank Nifty. I would not suggest any position but would advice you to wait and see what happens. 10880 is a strong support and I want to see if Nifty would touch that today. On the upside 11150 is a resistance.

So, its a very wide and volatile range, so no trade today, just try to see which direction Nifty goes.

Market Trade Setup 27th September #Nifty

Finally we are at the expiry day for a series that has been the second worst series in this year so far after the February series. As of now Nifty lost 620 points and February series lost 683 points and if Nifty loses 63 points today then we are looking at the worst series of the year. Global cues for the expiry is looking mixed with Fed hiking the interest rates by 25 bases points from 2% to 2.25%. That meant Dow lost 100 points in trade and much of Asia is looking green as this rate hike was already accounted for and there was no surprise.

On the domestic front, Rupee has been a bit stable with Rupee closing at 72.60 and but Crude is still at 82.2 which is very high but what will play out today are the expiry factors. As said before this series has lost 620 points so far and this series is going to the bears. So far for 8 months in this year 5 series went for bulls and 3 went for bears. No, it will be 5-4 for bulls and its a close race again. All eyes will now be on the 3PM move as to which direction it will come and with contrasting positions taken in the first and second half it is next to impossible to predict the direction of the 3PM move today. 

On the derivatives front, there was a rapid demand for the calls that got created yesterday as Nifty started to correct after the open and 11200 call added 11.3 lakh positions all, shorts and that took away 17 rupees premium from 22 rupees it had. Apart from that 11100 call as well as 11050 call were also sold with 5.2 lakh contracts generating for each strike. That brought the Nifty put call ratio to 1.09 which is also the second lowest after the February series. Now 11200 is the firm resistance for Nifty and breaking that is looking tough. On the downside 11000 is the support and at 30 rupees premium 10970 is the floor for the market. 

What is the Nifty call for the day?

We are looking at a slightly positive opening today at 11100 mark which is right at the center of 11200 and 11000 mark where open interests are hedged. We could see Nifty moving on either side and expiry will happen within this broad range of 200 points and that presents us some opportunity to take some short positions on the call side. The exact strike the timing will be tweeted after the markets open. You already have a short straddle at 11100 and that is in the profits giving you 125 rupees premium. So, sit back and enjoy the profits.

Market Trade Setup 26th September #Nifty

Market Trade Setup 26th September

A relief rally was seen yesterday which took Nifty 100 points up and now its on the cusp of re-conquering 11100. It went down to 10950 levels before jumping and closing above 11050 levels. It doesnt change in any way what I said yesterday of Nifty touching 10600-10700levels. It just means that temporarily for this expiry we have found a base at 11000 and are moving up. Yesterday was just the first step, today it has to act on that. Otherwise everything will be back to worse again and Nifty will go below the 11000 levels.

The global scenario is not great with US entering into trade wars with almost every country including India. First it was China, then it was Iran and then yesterday Trump had entered into a trade agreement with Mexico without taking Canada on board. On top of that he talked about removing trading incentives to India. To add to it, Brent Crude is still at 81.8 levels but Asia today is all in green with Hong Kong, Shanghai and Japan all trading in green. Rupee remained bit stable at 72.69 owing to weakening dollar index to 94.16. 

On the domestic front, we have plenty of micro problems and yes bank is on the top of the list. Now the management of yes bank has sent a fresh proposal to RBI asking it to extend the tenure of Rana Kapoor to 30th April 2019 instead of 31st January 2019 as he would complete the annual report by then. The other macro news is Govt putting pressure on RBI to cut the CRR in October policy from 4% so as to make liquidity available in the market. But it really doesnt make sense how much help the cut in CRR will make if the repo rates are raised further. 

On the derivatives front, the action is now completely on the options market as the put call ratio surged to 1.29 from 1.05 on the back of 100 point gain on Nifty. Puts have come into demand with 11000 put adding 3.4 lakh contracts, 10500 put adding 4.8 lakh contracts and 10600 adding 3.1 lakh contracts. Now 11000 put and 11200 call remain as the markers for expiry and that means we have 10970-11230 range to play. On the call side 11500 saw maximum unwinding of 5.2 lakh contracts followed by 11200 call which saw 4.6 contracts unwinding.

What is the Nifty call for the day?

A green Asia means we will open around 11100 mark and 11160 on the upper side is a resistance while 11040 on the downside could be the support. If these are taken out then 10960 on the downside is a possibility. I would suggest taking a short straddle for 11100 or a short strangle between 11000-11200strikes is a good strategy. I will tweet with what exactly to take depending on how the premiums move for these premiums.

Market Trade Setup 25th September #Nifty

Another red Monday with a more than 100 point fall has brought Nifty back to below 11000 mark and if you think the worst is over, we still have some of the worse still to come. The 200dma of Nifty is at 10750 and Nifty will try to negotiate that and it means we have another 200 point fall yet to come. Bull markets have their corrections and we have completed 7% of that correction and another 3% might take us around 10600-10700 levels and when that happens, its just the matter of time. But to lose 700 points in a month and 500 points in just 10 trading sessions is not at all a good thing.

The global scenario is also not that bright with Dow closing more than 180 points down on the back of worsening tensions with China and the sanctions with Iran also coming into picture now. The Fed meeting begins today for the Credit policy and there is an expectation of 25 bases point rate hike coming out tomorrow evening. But the biggest negative is the Brent Crude which has surged to a 5 year high of 81.3 dollars and we are above that dreaded 80 dollars and with Rupee worsening things really look ugly. Rupee closed at 72.63 yesterday and today we are surely going to see 73 and if it closes above 73 then its going to be worse for the current account deficit in India. On the Yes bank front, Rajat Monga who is the group VP and ex CFO of Yes bank could be the new boss as things stand today. But lot of time to go before anything is decided.  

On the derivatives front, there has been some buying that has come back to the futures after the battering we got but that is simply not enough to prevent the market from further sliding. The Nifty put call ratio in the options market has come down to 1.05 from 1.14 and this is the lowest I have seen in this year. For sometime in February it went to 1.05 and now we are back to same level again. Call are sold freely and there are 10 calls sold for every 1 put sold and that is contributing to the fall in PCR. 10800 put is now picking steam with 9.4 lakh contracts added and the gap between 11000 and 10800 put is just 6 lakh contracts so the danger of base moving to 10800 from 11000 is there. On the call side 11200 call is just 1 lakh contracts less than 11500 and today if there is a fall the roof will shrink to 11200 from 11500. 

What is Nifty call for the day?

A flat Asia means we will also open flat below the 11000 mark and with Crude above 81 and Rupee reaching 73 could be a deadly combination that could take the market into red. The fall has no limit and 10770-10740which is the 200dma range is the last support. On the upside Nifty wont go above 11200 levels and 11150-11180 might be a strong resistance. As said many times, money in the pockets is better than money in red. So, stay out and see which way the market goes.

Market Trade Setup 24th September #Nifty

Market Trade Setup 24th September

The expiry week is here for the September series. This could be the most dangerous expiry week I have seen in last 2 years. I am not saying that because there will be a fall, am saying this because of the way market fell and recovered on Friday. That opened up the volatility and high volatility on expiry week is something which is dangerous. Last 3 series saw a 1200 point gain of Nifty and with Friday’s low of 10860 levels means we have corrected 61.8% at 11000 levels and Nifty has moved above that level now. The risk now is will this hold or are we going to see Nifty test 11000 another time?

Globally things are not looking that fine, with Dow Jones closing almost flat and most of the Asian markets are in red. Hong Kong is down more than 300 points and the other Asian markets are also trending in negative. The Brent Crude is worsening now and its almost at 80 dollars level now. On the domestic front however the DHLF crisis seems to have temporarily settled with management saying that all is well now but I&FS is in deep trouble and resignations are happening at the top. All this will have some impact on the market today.

On the derivatives front also, bearishness seems to have gripped the market. The Nifty premium for futures is dropping rapidly and the focus has shifted to Options on Friday itself as many traders went on a buying spree. Lot of put buying was seen on Friday where 5 puts were bought for every 2 calls and when it comes to shorting the scenario is reversed. 5 calls sold for every 2 puts sold and that kept the Nifty put call ratio unchanged at 1.14. 11000 put and 11500 call still continues to have highest accumulated open interest triggering volatility in the market.

What is the Nifty call for the day?

Friday saw almost a 400 point swing on the Nifty and today it will be another flat to negative opening around 11100 levels and 11000 is the support for the market for any drop. On the upside the market can touch 11180 levels and that might present a resistance. We are in a clueless zone now and I feel we need to see the market for sometime before venturing into any positions. This is a very volatile market and one needs to establish the direction clearly before going for any positions.

Market Trade Setup 21st September #Nifty

Market set up 21st September

The last day of the 3rd week of a month that has brought so much of red into our lives. Nifty was knocking the doors of 11800 at the beginning of the month and now we are going towards 11200. More than 500 points lost in 3 weeks and today, things look much better but it is not sure if its real or after a green open whether it will fall again. The US markets are doing with Dow Jones closing more than 250 points up ad S&P 500 marching towards 3000 levels. All time highs are being made in US and will India also start recovering now? Asia is positive today with all markets in green so India will also have a positive start.

On the domestic front, things are looking slightly better with Rupee strengthening to 72.3 levels on Wednesday’s trade and the dollar index has fallen for the last two days and dollar is continuously weakening and its below 94 mark now which is a 2 month low. So, there is a possibility that rupee might strengthen further to go up below 72 mark. Bond yields also are looking to go below 8% and if all this happens it will add a lot of positivity to Nifty. Brent Crude also has stabilized around 79 mark and though its not a great news but we can be satisfied that it has not touched 80 mark in last 2 days.

On the derivatives front, the markers continue to be positive. First is though Nifty corrected 40 points, the Nifty futures premium has gone up from 30 to 38 points and rise in premium in a falling market suggests that at lower levels there is a lot of buying. Another indication is Volatility should go up in a falling market but on Wednesday volatility also fell and that also indicate some bullishness. On the options side the put call ratio fell to 1.14 from 1.19. 11000 has replaced 11200 as the strike with highest accumulated open interest. On the call side 11500 has the highest accumulated open interest. So, 11000 can be tested in a worst case scenario and 11510 is the roof for the market.

What is Nifty call for the day?

A holiday accumulation of 30 points and a positive Asia means we can open 70-80 points gap up and that means 11300 plus opening for Nifty today. If that happens then sustaining that level could be a crucial thing. If it sustains then 11340 will be the first resistance that Nifty might face and on the downside 11250 is a support. I suggest to go long on Nifty if 11300 is sustained and Nifty is rushing to break the 11340 resistance. Then yo can keep a 11380-11400 target for the long till the expiry. Stay out if there is selling after gap up and Nifty remains below 11300.