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Market Trade Setup 1st February #BudgetDay #Nifty

Market Setup 1st February 

The month of February is here and 2019 is not a new year anymore! What February kicks in is a very important event of Budget and for the last 3 years, Govt has kicked in the practice of presenting the budget on the first day of the month instead of the last day of the month, which was a practice till 2015. Today is the budget day but this year will have two budgets one now and another in the month of July. This is going to be an interim budget which will be applicable for the first 5 months of this fiscal. Interim finance minister Piyush Goyal will present this interim budget which is likely to bring in a lot of sops for every segment of the population in India.

What are the challenges in today’s budget?

This budget is coming at the back of a dismal jobs data of NSSO that got leaked to a Business standard that has put the unemployment rate at 6.1% which is the highest since 1974. This was countered by Govt which said that this data is incomplete but that’s too little too late. The CMIE which is a private body that the measured unemployment in households has come up with a data that in the year 2018 we lost 1.8 Crore jobs and that will add to unemployment and they put the unemployment at 5.5%. Another big problem that Govt needs to look at is the fiscal deficit targets that Govt has been missing. Govt, when it took over in 2014 had a fiscal deficit of 4.9% of GDP and they brought it down to 3.5% by 2017 but after that the road has been rough.

What might go wrong for Govt?

The Demonetization which served no purpose, GST which hit the MSME sector very strongly has affected the economy as well as the fiscal deficit. The fiscal deficit for 2017 and 2018 remained at 3.5% and for 2019 Govt has aimed 3.3% fiscal deficit but looks like this target will not be met. Govt also has the practice of presenting annual economic survey one day budget but this year Govt has done away with that practice. All this will cast a shadow and the behaviour of the opposition also will be a crucial factor in presenting the budget. The opposition is very vocal and any attempts by the Govt to announce any sops will be met with a lot of noise and disruption and the Govt’s ability to manage the floor also will be a crucial factor to observe in today’s budget.

What to expect from the budget?

This is an election year and every Govt has the practice of presenting something for the poor and marginalised. In 2014 Chidambaram also brought in food security bill just before the elections but that simply did not work. This time Govt will be much wider in the spectrum as well as spending with big announcements expected on the tax front. A huge relief is expected to be given to the middle class and working class. Apart from that farm loan waiver or direct cash transfers in line with Rythu Bandhu scheme of Telangana and KALIA scheme of Orissa is likely to be announced. Added to this some sops for the business class which is the core voter for BJP is also expected. All this might put pressure on fiscal targets and market might not like them.

Budget 2019!
What is the Nifty call for the day?

We have closed our positions yesterday at 10750 and today we are expected to open around 10840-10870 range and that is a situation where we will encounter with the resistance zone of 10950. This is a macro event and only macro events can make markets to break the resistance. If the budget has the strength it will take the market above 10950 and will make it touch 11000. If it is bad then we might break 10700 and might go below that. This is a binary event and involves a lot of risks. Today my strategy is going to be different. I advise you to go long as soon as the market opens at 10840-10870 levels with 10950-11000 as the target. Keep watching the budget moves carefully and try to exit if that range is reached. If there is a fall then keep 10800 as stop loss and exit if things start to get adverse. Budget trading is a professional trading and you need to do it carefully and professionally.

Market Trade Setup 25th January #Nifty

Market Trade Setup 25th January

The focus is now shifting more and more towards local factors than global factors. Globally, US is on 24-day shut down now and its priced in. The trade negotiations are still going between US and China on trade and Brent Crude is hovering around 60-63 dollars and its bouncing back whenever it touches 60 dollars. The latest is the sanctions on Venezuela by the US, and I feel pity for that country. In the last 4 years the GDP fell by -51% and inflation is at 1200% and I don’t know how a country can survive in these conditions. Back to markets, US was flat and Asian markets are in green with Hong Kong 350 points up and Japan is up 200 points. 

Coming to domestics, Yes bank is the news with Ranveet Gill being appointed the new MD & CEO. The stock has jumped over 10% in the last 30 minutes of the trade and this could be the beginning of the good tidings for Yes bank. Another important trigger is the Supreme Court judgement today around 10.30AM on the bankruptcy code. The market will watch it very closely. Today is again an important day for Q3 results and following are the Q3 results expected today: Gati, Gruh Finance, L&T, M&M Finance, Maruti Suzuki, Saregama and Vakrangee. So, L&T and Maruti is something that market will be closely watching today. Brent Crude is now is on its way towards 62 dollars. 

On the derivatives front, there was a lot of selling and now the overall long positions stand at 45% in Nifty Futures. There was an equal push from puts and calls in the options market and the Nifty put-call ratio remained at 1.43. There was a lot of action on 10800 put where 4 lakh fresh positions were added and at 50 rupees premium traders believe that this series, it will not break 10750 mark. 10800 put as I predicted at the beginning of the series now has maximum open interest of 36 lakh positions followed by 10700 put at 31.1 lakh positions. On the call side 11000 call firmly stood the test of the time and has the maximum open interest at 43.8 lakh positions. 10900 call is next at 36 lakh positions. 

What is the Nifty call for the day?

If you remember, yesterday I asked you to take a long position if Nifty holds 10780-10800 range and asked you to take that position to the next day if those positions don’t meet the target. I asked you to take long at 10820-10850 with 10900 as the target. Today Nifty went all the way till 10860. Today, due to green Asia, we will have a gap up opening around 10880-10900 levels. Your targets will be met. As soon as they are met just exit with profits ranging from 50 to 80 points. 10920-10950 is a resistance zone and you might not get anything positive till Nifty crosses that. So, book profits and go celebrate the Republic Day tomorrow!

Market Trade Setup 23rd January india #Nifty

As predicted we had a fall in Nifty yesterday, and that was coming, seeing the way the Nifty premium was halving. Now we are back into the resistance zone of 10920 and now it is very clear that until and unless the market gets some big fundamental news, crossing 11000 is going to be impossible. Going back to global factors, US markets which were shut on long weekend finally opened last evening and then everyone got to know that US China trade talk was just a rumour and there is no trade talk planned. That sent the market into tail spin and Dow Jones closed 33 points lower. Maybe it was also reacting to IMF global forecast. Asia is trading mixed today as there is no major news.

Coming to domestics, the Q3 results are coming thick and fast. Asian Paints came up with very good numbers and the valuations are raised by all the broking companies from 45x now to around 50x to its forward earnings. Today is going to be a very important day as many of the major companies from crucial sectors are coming up with their Q3. Following are the Q3 results expected to come today: Canarabank Finance homes, Everest Industries, Hathway cables, Indigo Airlines, ITC, JM Financials, Pidilite industries, Radico, Raymonds, Reliance Communications, Ujjivan finance and Vijaya bank. 

Coming to derivatives, the action is now firmly on the options and there has been a fall in the Nifty put-call ratio from 1.59 seen at the beginning of the day to 1.53 by the time the trade ended. Index futures saw just 13,871 Cr turnover while options saw 4.19 lakh crore with total stock and index derivatives trading value at 5.55 lakh crores. Another notable feature was as Nifty fell below 10900 yesterday the 10500 again emerged as the strike with highest open interest. Now 10700 has the 2nd highest open interest which means down side is still open to 10500. On the upside, however, 11000 is now a major resistance, almost impossible to cross.

What is the Nifty call for the day?

If you have stayed away yesterday as per my advise you would have saved yourself from a lot of downward movement. Nifty is looking weak and today the opening might be in the resistance zone of 10920-10950 range and there can be furthermore profit booking at these levels. Today I would advise you to go short. You can take a short position at the open near 10940-10960 mark with 10880-10900 as the target. This 40-50 point target on sort side is all you can look for today.

Market Trade Setup 22nd January India #Nifty

Market Trade Setup 22nd January 2019

Look at the way Nifty is crawling for last few days! A week ago Nifty was around 10800 and in last 5 to 7 trading sessions step by step, slowly Nifty crawled its way to 10950 mark. In the process it has slowly overcome first the 10820-10850 resistance and then 10920 resistance. Both took a lot of effort and now its closed above 10950. So, what will happen now? Will Nifty now touch 11,000 and go on from there? Will there be a post-budget rally that will take Nifty to 11500-11800 levels just before we kick off the 2019 elections? All this look more speculative and far fetched but for now, there are some immediate fears that we have to deal with.

The first issue to deal with is UK Prime Minister Theresa May comes out with her Plan B and says that there wont be any other referendum on the Brexit. The other news is the IMF coming up with the global GDP forecast for 2019 which is expected to be at 3.5% vs 3.7% seen in 2018. So, a slowdown is indicated globally which is always a worrying point. The Chinese GDP data has already confirmed that. Most of the Asian markets today are in the red on this report and the Crude is also trading in 62 dollar mark for last 2 days and now we are seeing the petrol prices going up again. After reaching the lowest rate in 15 months of 72.44 rupees, Petrol price in Hyderabad is now at 75.61.

On the derivatives front, yesterday’s rapid 50 plus point move the premium has more than halved from 20 points to 8 points. Last time when such a thing happened, next day market corrected almost 80 points. Are we going to see a similar correction today? The options data is not giving a clear picture and options traders are still figuring out where Nifty might go. The put-call ratio went up marginally from 1.56 to 1.59. 10900 put added 6.3 lakh contracts while 11000 put also added 5.4 lakh contracts. 10700 has the highest open interest and the gap between 10500 and 10700 put gradually increasing. On call side, 11000 call still has the highest open interest. 

What is the Nifty call for the day?

Yesterday I asked you to take a position between 10900-10920 with a target of 10980 and yesterday Nifty went up to 10987. So, you would have made a 60-80 point profit minimum. Today is not as lucky as yesterday. A red Asia means we will open bit flat around 10930-10950 levels and what happens after that needs to be seen. Watch out carefully, if Nifty is weak, stay away. If 10900 is broken then stay away from the trade. If you have still been holding positions of yesterday then exit as soon as the market shows growth. No fresh trades today.

Market Trade Setup 10th January India #Nifty

Market Trade Setup 10th January

A mixed trend in the markets as we approach the second half of the week. The Dow Jones continued its growth and has ended up by 100 points while S&P has gained more than Dow Jones in percentage terms. This is on the back of lower than expected inflation numbers which means the Fed rate hike which was looking at a minimum of 3 hikes in 2019 sometime back is now at just 1. The same sentiment is not being shown by Asian markets which are down. Hong Kong is down nearly 200 points and so is Japan which is down nearly 300 points. China is the only market which is in the positive territory. On the Crude oil front, the Brent Crude has crossed 60 dollars and has almost touched 61 dollars, which is now a sign of worry.

On the domestics, there are quite a few fundamentals that are affecting the Indian markets now. The big positive news is the Victory that BJP Govt secured by passing the Reservations bill for EBCs in Rajya Sabha where it doesn’t have numbers. Govt got 165 votes out of 173 present in the house which is the 2/3rds majority that was required for a constitutional amendment. IndusInd bank made an average beginning to Q3 results seasons where the slippages have gone up and even the NII has shown a decline. This is mainly because of the exposure to IL&FS so the market is ready to forgive that. Today TCS will come up with its Q3 results and that will happen only after the market hours at 5 PM. The negative is the Rupee which crossed 70 per dollar again. 

On the derivatives front, there was net buy by FIIs in Nifty futures and thus the turnover went up 30% from yesterday to 24,123 Cr. The options turnover has also increased from 7 lakh crore to 10 lakh crore and we saw an 11.1 lakh crore turnover, which is the highest in this series so far. The Nifty put-call ratio went up marginally from 1.41 to 1.43 mark at the end of the day. On the open interest positions, however, there is not much change as 10500 put and 11000 call still continue to have the highest open interest. We saw only 10900 put adding 2.2 lakh contracts while 10900 call added 1.4 lakh contracts.

What is the Nifty call for the day?

Yesterday’s trade worked perfectly as you would have made at least 70-80 points profit from the positions you might have taken on Tuesday. Yesterday I asked you to stay away from the market and that worked perfectly, the market has almost remained flat. Today we will have a 10870-10890 kind of start with 10920 as the big resistance again. So, there is no trade if Nifty remains in 10880-10920 zone. If there is a drop coming in the afternoon or after 11 AM then wait for a base. If Nifty holds 10820 then take a long position between 10820-10850 zone with 40-60 points as the target. We will have to see if 10920 will be decisively broken or not.

Market Trade Setup 5th December #NIFTY

Market Setup 5th December

There was a huge scare that we woke up to. Dow Jones has plunged 800 points overnight. This is the worst fall for Dow Jones since 2011. This is coming on the back of the global growth scare. Added to that is the doubts that US-China trade truce might not last for long.

The main point is, why did Dow lose 800 points? The answer came from the flattening of the Yield curves of 2 yr, 5 yr and 10 yr bonds where the interest rates have narrowed so much that 5 yr yield fell below the 2 yr yield curve for the first time since 2007 and the spread between 2 year and 10 yr yield curves went to the narrowest of 11 bps for the first time in 10 years. This according to Rabo bank is the signs of the recession coming as soon as June 2020. All the Asian markets also are trading in negative on the back of this terrible news coming from the US.

On the domestics front, we have a different fundamental to deal with and that is going to the RBI credit policy which is going to come at 2.30pm today. Three factors are important here. First is what will happen to CRR, SLR and Repo rates. According to me, RBI will not touch CRR and Repo which are at 4% and 6.5% now but they can actually look at reducing the SLR, which is the money that can be parked by banks in Govt securities. This is at 19.5% now and RBI might bring it down to 18.5% to allow more liquidity in the market, which is what Govt wants now. Second is the tone of the policy, which might be changed to “neutral” from “calibrated tightening” and RBI might sound dovish in it statement. The Third is the inflation and growth projections. RBI might bring down its inflation forecast by upto 50 bps which is good and the growth forecast from 7.5% to 7.4%. 

On the derivatives front, there has been a lot of action seen in the Futures market both on the long side as well as short side. The options market has the Nifty put call ratio going up to 1.70 from 1.68. 10800 put added 2.8 lakh positions while 10600 put added 2.2 lakh positions. Still 10000 put continues to have the highest open interest while 10500 put is also picking up the open interest. On the call side 10900 call added 76,000 open interest and 11000 call still continues to have the highest open interest of 27.2 lakh and 11200 is also slowly picking up in the open interest. 

What is the Nifty call for the day?

The global growth scare will make the Nifty open today in the 10810-10840 range and what happens further needs to be seen. If you have taken positions yesterday around 10840 odd levels then wait for 10900 to be reached before closing positions. If you have not taken any positions, then wait for Nifty to stabilize at 10780 zone and go long with a 50 point target. Today’s monetary policy will add some volatility and use that to exit positions not enter. 

Market Trade Setup 16th November #NIFTY

Market Trade Setup 16th November

The Weekend is here and we still have 10 trading days still left for expiry and this is a long series. I gave a no trade call yesterday and Nifty remained in 10550-10610 zone and you might think retrospectively that you can make some profit by taking long positions intraday. These are tight trades that nobody can accurately predict and unless Nifty crosses 10650 and stays above it, its not a sign that markets will go up. Dow Jones recovered yesterday after 2 continuous days of fall and went up 200 points. Asia is more or less flat today and the main news that will dominate Europe is the Brexit and we have to see what happens on this front in the next few days. The minister in-charge of Brexit has resigned and within the conservative party there are multiple views. So, this fundamental will dominate for sometime.

On the domestic front, there are two not so good news to talk about. First is the trade deficit numbers for October has not been great as trade deficit widens to 17.1 billion dollars and this is not a good number compared to the deficit of 14.6 billion seen in October last year and 13.9 billion seen last month. The main reason is due to the high import bill of Crude as both the Brent Crude as well as rupee were negative for us. Oil imports stood at 14.21 billion compared to 10.1 billion in september. Imports stood at 44.11 billion vs 37.5 billion seen same month last year while exports grew to 27 billion from 22.9 billion seen in the same month last year.

The second news is the crucial RBI meeting on Monday which can decide many things and which has the potential for many things to go wrong. S. Gurumurthy who is the board member as well as a right wing activist has criticized the monetary policy for only focussing on inflation and not on liquidity. When the board meets on Monday, it could turn into a stormy session if the two groups within RBI start going against each other. So, market will look at the event with some nervousness as we dont know which way the events will go. The other fundamental is the Brent Crude which after falling to 65 dollars has slowly moved upto 67 dollars now.

On the derivatives front, the action was almost mixed in the options market and the Nifty put call ratio remains at 1.61 and that indicates how stagnant this market is. 10200 put continues to add some open interest and yesterday it added 1.6 lakh positions. Now the total open interest at 10200 put is 33.5 lakh vs 10000 put that has 48.9 lakh positions. On the call side 10800 call added 1.3 lakh positions and the total open interest there went up to 30.5 lakh and 11000 call still has the maximum open interest at 34.1 lakh contracts. Next week things might shift a bit and we need to see which way things go.

What is the Nifty call for the day?

A mildly positive Asia means we will open a bit gap up at 10650 levels which is also the resistance zone. Will Nifty take out this resistance and go to 10680 in the morning or will Nifty again correct a bit and touch 10600 levels!! A lot of questions to be answered and we also have a very important fundamental on Monday and that might not make the market very comfortable. So, today also I suggest not to take any risk and just see if the 10650-10680 zone is take out or not.