Tag Archives: Trading Strategies

Market Trade Setup 20th February #Nifty

Market Setup 20th February

After a great start, when we all thought that we might escape a fall and close at 10700 level we saw the classic last hour fall of nearly 120 points that took Nifty to below 10600 and due to the averaging of values we closed just above 10600 mark at 10604. This marks the 8th consecutive fall and we have not witnessed it for a long time, not in last 4-5 years! Are we going to see another one today or is the pain over for now? World markets are mixed with Dow Jones closing totally flat with a gain of just 8 points while Asian markets are showing a lot of positivity with Hong Kong up close to 350 points and Japan up 150 points and other markets in 0.5 to 1.5% up. 

On the domestic front, Crude seems to be emerging as a worry as Brent is now at 66.5 dollars. This will put some pressure on the rupee and in the domestic market also the petrol prices are being revised on the upside. Last 4 days saw 60 paise rise in Petrol prices in Hyderabad and Petrol now stands at 75.34. On the macro front, GDP figures are going to be out in a week’s time and going by the Q3 results things look bleak and there is a fear that GDP which grew at 8.2% in Q1 is likely to drop below 7% in Q3 and that will act negatively on the market. On the political front, the developments on Pulwama and the political statements that the leaders make will have to be watched very carefully. 

On the derivatives front, yesterday was the story where neither in futures nor in options we went anywhere. The Morning saw a lot of buying in Futures but everything changed as Nifty started to fall. The long positions still remain at 45% and the Nifty put call ratio fell a bit to 1.11 vs 1.13 seen at the beginning of the day. This is a level where puts will get demand and that means markets should go up. Tomorrow is the weekly expiry of Options and on the put side 10600 has the maximum open interest and 10800 call has the maximum open interest which means that there is some scope for a rally. On the monthly contracts however 10400 put and 11000 call has the highest open interest. 10700 put and 10800 call are also gaining open interest and we need to watch them. 

What is the Nifty call for the day?

Yesterday, if you have thought that you missed a good chance to make money, you would have heaved a sigh of relief by evening that your money is safe in your pocket. This is the nature of the market now and taking risks comes at a huge cost. With a 10670 open and 10710 seeing selling you really wouldn’t have any chance to enter or exit. Today we will see a positive start again due to positivity in Asia at around 10630-10660 levels. What happens after that needs to be seen. If 10620-10650 range is protected in the first hour, then take a small risk and go for a long position with 10700-10720 as the target, whenever it comes. You might take it to tomorrow also if targets are not met today. Make sure that your entry point is between 10620-10660 mark so that the profit you get is meaningful and take this position only if 10620 is not broken. If it is broken, and Nifty goes below 10580 then stay away.

Market Trade Setup 18th February #NIFTY

Market Trade Setup 18th February

A nervous weekend comes to an end and we are back to the second half of this shortest expiry monthly series. Nervous on what will happen at the borders and nothing big has happened and that is the good news as well as bad news. Good news because we will still work on the other known cues to predict the markets and bad news because uncertainty and pressure will continue in the markets and so everything will be approached on a doubtful note. Meanwhile, the positive news on the US-China trade talks pushed up the US markets which rose by a massive 440 points. That rubbed off on the Asian markets also today and Hong Kong is up close to 500 points now and Japan is up 370 points and all the other Asian markets are trading in the green. 

On the domestic front, OPEC has further cut the crude production and that has pushed the crude oil from 65 dollars at the weekend to 66.2 dollars and that would be one of the reasons why Nifty might not go up as much as other markets today. Added to that we have the big domestic factor of Pulwama attacks where Govt has not taken any concrete steps against Pakistan except warning them, which will weigh on the minds of the markets. RBI has pulled up Yes bank for revealing the confidential letter that it sent them about the no divergence and it is nothing short of a breach of trust and confidentiality norms. Today you might see Yes bank stock in the pressure again. On the Q3 front, results season has almost ended and today Ambuja cement is only the major company up with their Q3. 

On the derivatives front, Friday saw a lot of short positions getting built on the Nifty Futures and with that, the overall long positions fell to 47% at the end of the day from 49% at the beginning of the day. On the options front also, the Nifty put-call ratio dropped to 1.30 from 1.35, even though markets recovered at the end of the day on Friday. 10400 put added maximum contracts of 2.6 lakh followed by 10500 put which added 2.4 lakh contracts and 10700 put 1.7 lakh contracts. All the other Strikes shed open interest. 10700 put has highest open interest at 32.1 lakh positions while 10400 put is close behind at 31.3 lakh contracts. So, any fall below 10700 today might take Nifty towards the 10400 mark and this is something that traders should closely observe. On the call side, 11000 call is acting as the roof to the market. 

What is the Nifty call for the day?

Despite a positive Asia, we might not open that positive today because of the crude and the domestic factors and we could see an opening between 10730-10760 mark with a maximum upside potential of 10780-10800. I had stopped you from taking any positions and Friday but on Thursday I asked you to go long at 10720 levels. If you had taken that position, today is the best time to exit. Exit this position anywhere between 10770-10790 levels and see what market does. On the down side 10620-10650 might act as a support to the market. Today is also a no trade day for me as we are going through a severe pressure from within for whatever positive factors that are occurring globally. If today Nifty closes above 10750 then we can look at some trades tomorrow.

Market Trade Setup 15th February 2019 #Nifty

A tough week is coming to an end with a very sad news coming from pulwama where 44 of our brave soldiers were martyred in a suicide attack of terrorists from across the border. India has promised a befitting reply at a place and time of its choosing. This brings a lot of uncertainty into the market which will be worried about the kind of reaction and its consequences. Globally also things are not looking good where growth fears are back again and Dow Jones lost 100 plus points last night. Asian markets are in red with Hong Kong down 400 points, Japan down 250 points, Shanghai and Korea in mild red and only Taiwan in flat to green. Brent crude is also a cause of worry which is now at 65 dollars which in a week gained 4 dollars. 

Domestically, Yes bank was a star performer yesterday with a largest ever intraday gain for itself of 31%. Imagine a stock going up 31% on a single day, that’s what one clean chit from RBI can do. Another positive we can look forward to is the Jet Airways restructuring plan. Finally a restructuring plan seems to have worked out where the majority of 51% of stake in Jet will be held by the promotors and Naresh Goyal whose stake is 51.5% now is like to come down to 25% and Etihad which has 24% stake is likely to come down to 12%. Q3 results seem to be mixed with Nestle disappointing again, for Nestle which follows calendar year its Q4 results. Pharma company Glenmark was a relief which reported 11% rise in sales while MTNL, Jet Airways, Voltas were a disappointment. 

On the derivatives front, yesterday was Nifty weekly expiry and there was so much selling yesterday even in the monthly series that the long positions which were at 55% came down to 49% by evening. This is something which is very rare. Contrary the Put call ratio went up to 1.35 from 1.29 on the back of short put positions that got created. The first weekly expiry on Nifty and Bank Nifty clocked 15.89 lakh Crore turnover which is almost equal to the monthly expiries. So, the expectations that volumes will go up has actually come true. 10600 put added 3.8 lakh contracts and 10700 put added 3.5 lakh positions and 10700 put now has the highest open interest which means 10630-10650 is the support for this month. On the call side 10800 call added 8.2 lakh positions and 11000 call has the maximum open interest. 

What is the Nifty call for the day?

Today is Friday and the cues across the globe are not that good. Even the domestic situation is challenging with market worrying what kind of retaliatory action India will come up with in pulwama. Brent crude also is at 65 dollars and all that means we will open in 10740-10760 range and we need to see if 10750 holds or not. If 10720-10750 doesnt hold and Nifty slips below that before 12 then its a warning sign to stay off. I know that you have not traded for almost a week but these are testing times and we need to hold on and wait for the right opportunity. If by 3PM also Nifty manages to hold 10720-10750 then you can venture into taking a long position, but remember that a lot can happen over the weekend in Kashmir which will have an impact when we open again on Monday. So, its all looking very risky indeed.

Market Trade Setup 13th February #Nifty

Market Setup 13th February

As we approach the middle of the week we are looking at a 125, 56 and 57 point cut in the last three trading sessions and that is a total 238 point cut. If we look at the Nifty on 1st Feb, which was also a Friday, we started from exactly the same level of 10831 and went up 238 points before correcting. So, from 1st Feb to 7th Feb we went up 238 points and from 8th to 12th Feb we fell 238 points. That puts us at a very interesting position of what is going to happen today. Global markets are positive with the US gaining nearly 400 points yesterday on the news that US Govt shut down is finally coming to an end. The feeling has rubbed off to Asian markets also today as they all are in a positive zone with Japan up 350 points and Hong Kong up 150 points. Brent crude is a worry as it’s at 62.8 dollars almost touching 63 dollars. 

On the domestic front, we had the IIP and CPI data that has come yesterday evening and everything came in the range I gave. I said IIP will be between 2.2 to 2.7% and we got a 2.4% IIP for December. On the Inflation front, I gave a 2.0 to 2.4% range and we got 2.05% inflation for January. In that also I gave 5.4 to 5.7% on services inflation and we got 5.4% for the services sector. This is 19-month low inflation and food inflation is still worse at -2.17% and that is something we need to look at. On the Q3 front, finally, some good has come from Bata which declared a fantastic set of numbers. For the last 2 years, I was bullish on Bata and it continues to deliver. Coal India also surprised with good numbers and looks like some good news coming on Q3 front. 

On the derivatives front, there was a lot of positive action on the Nifty futures front, where there was a lot of buying as the markets were correcting in the last hour of trade. The overall long positions now stand at 54% vs 41% at the beginning of the series. On the options front, however, there is a lot of demand for calls than puts. 9 calls were sold yesterday for every put sold and that took the Nifty put-call ratio to 1.35 from 1.47. For tomorrow’s Nifty expiry 10850 put added 1.1 lakh positions and 10800 put added 1 lakh positions. 10800 put now has the highest open interest now. On the call side, 10900 call added 8.2 lakh positions while 11000 call added 4.6 lakh positions and 10950 call added 4.1 lakh positions. 10900 call has the highest open interest. 

What is the Nifty call for the day?

Yesterday, I advised you to take a long position only if Nifty goes below 10850 and holds 10820. This has happened only in the last hour of the trade so very few people would have taken positions. Nifty will open around 10840-10870 zone and the positivity might take Nifty to 10900-10920 zone. If it goes there, exit your long positions. You will still get a 60-80 point profit. If you have not taken any positions yesterday, today you might not get enough room to take long positions and make profits. So, I advise you to wait and watch if Nifty breaks the 10920 resistance or not and where the close happens. For today there is no trade in Futures.

Market Trade Setup 11th February 2019 #NIFTY

Market Trade Setup 11th February 2019 #NIFTY

We are back to the 2nd week of this shortest month after a big 125 point fall on Friday, erasing almost all the gains made during the week. This week starts off with a big warning from IMF Chief Christine Laggard saying “When there are too many clouds it takes one lighting for the storm to commence”. Added to that fact state, an economic monitoring agency has forecasted a contract of earnings of more than 1% in the 1st quarter of 2019. All that has started to impact the market and the US-China trade talks not going anywhere, there is dullness all over. Most of the Asian markets that were shut for one full week on the back of Lunar new year of China have opened today and are trading mixed. 

Coming to domestics, there was a big fall on Friday on the back of disappointing news from the Q3 front. Tata Motors was a big disappointment and things are looking very bad for many companies. Debt has become a bad word today and any company which has more debt than it can manage is seen collapsing. The classic example is the pack of ADAG stocks and stocks like Escorts, Tata Steel, M&M etc. Almost all the auto stocks have cut their guidance and this spells doom to the automobile sector. The Q3 results are in its last stage and following are results expected today: Amararaja batteries, Andhra bank, Century textiles, Eicher Motors, Hindustan copper, Max retail, Motherson Sumi, Spicejet and Virinchi.

On the derivatives front, there was a huge selling in the Nifty futures on Friday and that took the overall long positions to under 50% again and now they are at 49%. On the options front also, lots of short positions were unwound on put side taking the Nifty put-call ratio to 1.59 from 1.82. 11000 put shed 7.3 lakh positions while 10900 lost 7.2 lakh positions and 10500 put lost 6.4 lakh contracts. 10400 now has the highest open interest which is scary. 10700 is close behind it. On the call side, 11000 call added 6.7 lakh positions and it has the highest open interest. Another news is weekly options will kick off from today and Nifty and from today we will have the first weekly options opening for 14th February.

What is the Nifty call for the day?

This is a very uncertain market and Friday’s fall has established that strongly. I cautioned you from trading on Friday and am sure you would be feeling happy about your money being in your pocket. Looks like even today you have to keep your money in your pocket itself. Nifty is likely to open around 10920-10950 zone which is the previous resistance and now support. We need to see if that is taken as a support and move up. Even if it does 10980 is another resistance and we need to see where the Nifty closes. If Nifty closes above 11000 then we can have fresh trade opportunities from tomorrow. Else, it’s going to be another long wait for an opportunity to emerge.

Market Trade Setup 8th February 2019 #Nifty

Market Trade Setup 8th February 2019

Yesterday’s 25 basis point rate cut by RBI had triggered a short term rally that took Nifty to 11,120 mark but it couldn’t sustain. You wouldn’t have had any chance to take a position as Nifty was always close to 11,100 mark from the time it opened. So, no positions would’ve been taken yesterday. The USA markets were negative with Dow closing 220 points lower and NASDAQ nearly 100 points down. Today Asian markets are trading mixed with Japan and Hong Kong down 350 points each, while China and Singapore are trading in mild green. Brent crude has fallen below $62 and is trading at $61.4 now which is a positive sign for India.

Coming to domestics yesterday’s monetary policy has evoked mixed reactions where there was a 25 basis point rate cut bringing down the repo rate to 6.25% and MSF and Bank Rate to 6.5%. The inflation forecast was also lowered to under 3% for first half of 2019 and the tone of the policy was also changed to neutral from calibrated tightening. Though markets liked it initially, it couldn’t sustain as there were some growth concerns with services inflation still at 5.8%. So this 6.5% Bank Rate would effectively yield 70 basis points margin for banks which is much lower compared to 125 to 150 points margin kept during the Rajan’s time.

Coming to derivatives there was a mild buying seen in futures market where the overall long positions still stand at 52%. On the options side the Nifty put-call ratio has come down to 1.78 from 1.83 seen at the beginning of the day. On the put side 11,000 put added maximum open interest of 5.3 lakh positions followed by 11,200 put which added 4.2 lakh positions. From 10,700 the floor for the market has shifted to 11,000. 10,700 now has the second highest open interest. On the call side 11,400 call added 4.2 lakh positions and 11,500 call added 3.7 lakh positions. 11,000 call still has the open interest but there is a lot of open interest building at 11,400 and 11,200 which might emerge as the roof going forward.

What is the Nifty call for the Day?

Yesterday there was no chance to take any positions and today Nifty might open slightly gap down between 11,030 to 11,060. On the downside 10,980 is a big support and it might face resistance at 11,080 to 11,100. Today is the last day of the week and some profit booking is expected at any time. So, I would advise to stay out from Trading and look at the Nifty from a fresh point of view as we get into the second half of the series on Monday.

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 30th January #NIFTY

Market Trade Setup 30th January

Penultimate day for the expiry, and what a day we had yesterday! There was a time when nifty broken 10600 and that gave shivers to bulls but then there was a dramatic recovery in the latter half of the day and we had conquered 10650 and just closed above that. This is one positive signal for bulls going into the expiry. Global markets were almost flat with Dow gaining just about 50 points but NASDAQ lost 70 points. The Asian markets are trading in the mixed terrain today with Korea and Singapore in positive while Japan, Hong Kong and China in slightly negative territory. Brent Crude again climbed to 61 dollars, trading at 61.3 dollars per barrel.

On the domestic front, there is a lot of politics playing around with Rahul Gandhi coming up with a minimum guarantee scheme for the poor. That would approximately work out to 650 rupees per month per family and that would cost 2 lakh Crore for the Govt. BJP fired the Ram temple salvo by requesting SC to handover the undisputed 67-acre land to Ram Janmabhoomi trust. Amidst all this, there was a positive cheer on Q3 results, with Bank of Baroda and HDFC coming up with a very good set of numbers. This is a huge relief. Today’s Q3 results include Bajaj Auto, BEL, Castrol India, Heritage foods, ICICI Bank, Indian Oil Corporation, Jubilant food works, LIC housing finance, NTPC, Tata communications and Torrent Pharma.

On the derivatives front, the put-call ratio of Nifty remained more or less intact at 1.21 vs 1.23 at the beginning of the day and there was the unwinding of positions that was seen both on the call side as well as the put side. The index options saw 6.55 lakh crore turnover and that took the total F&O turnover yesterday to 8.55 lakh Crore and we are looking at a 10 lakh crore turnover today. 10650 put added 2.9 lakh positions while 10800 put saw 6.3 lakh contracts unwinding. On the call side, 10600 call added 4.3 lakh contracts while 10700 call added 4.2 lakh contracts. 10500 put still has the highest open interest, close behind are 10600 and 10700 put. Today will be an interesting day where we will see where we could see some decisive open interest build up. On the call side, 11000 call is firmly placed at the roof.
What is the Nifty call for the day?

Two days running you were not doing anything and I will surely give you some options strategies to work with once the markets open and premiums settle down. Watch out for my calls on Twitter. Coming to futures trading, there could be a flat open for Nifty between 10640-10670 zone and 10720-10750 can be the destination today. On the downside, 10580-10600 will be strong support. There is a 30 point additional premium on Feb futures and I suggest you to take a long position on February futures as January expires tomorrow and you would be taking a huge risk if you play with Jan series. Enter a long between 10620-10650 spot and keep a target of 10720-10750 on spot prices. That would give you a profit of 60-80 points. 

Market Trade Setup 29th January #NIFTY

Market Setup 29th January

The first day of the expiry week went to the bears where Nifty saw a fall of close to 120 points and now we are back to 10650 levels and the crucial support level of 10700-10720 was decisively broken. Now the downside is open to 10500 now and that looks bit scary. Not only India even US markets fell yesterday where Dow lost more than 200 points and it was on the back of bad numbers from Caterpillar, which is one of the bell weather stocks in the US. The data that is coming is negative across the globe and that is worrying everyone. Today Asian markets are all in red with Hong Kong down 250 points and Japan by 200 points. The only positive is the Brent Crude which fell to 60.1 dollars from the 62 dollars we saw a few days ago. 

Coming to domestics, there are plenty of worries that Govt has to deal with. Rahul Gandhi has announced minimum job guarantee for poor if voted to power and BJP now is on course of making bigger announcements. This will surely put pressure on the fiscal situation in India. The Q3 results continue to be disappointing with Bank of India coming up with a very bad set of numbers. The last 4 quarters have seen a loss of close to 10,000 Cr and that’s a lot of money. Other companies that came up with their numbers is also not very encouraging. Today is a very important day for Q3 and many financial sector companies are coming up with their Q3: Axis Bank, Bajaj Fin services, Bank of Baroda, Godrej Consumer products, HCL Tech, HDFC, Oriental Bank and Tata coffee. 

On the derivatives front, yesterday was a fall day and in Nifty futures market there was some buying initially hoping that market will be taken support at 10700 mark but when it was broken then rollovers started. The first-day Nifty futures rollovers were at 22%. In the options, the index options saw 1.12 Crore contracts with a turnover of 7.09 lakh crore and the total turnover was at 8.98 lakh crore. 10500 put is back as the put with the highest open interest and that added 1.3 lakh positions and 10400 put also getting a lot of open interest with 3.6 lakh contracts added. 10600 put also added 3.6 lakh contracts. On the call side, 10700 call added 16 lakh contracts and 10800 call added 10 lakh contracts. As a result, Nifty put-call ratio plunged to 1.23 from 1.37 seen at the beginning of the day. Now Nifty can gravitate between 10500 to 11000 levels.

What is the Nifty call for the day?

If you are a bull, yesterday was a perfect time to take a break and we have taken a break as I avoided you from taking any positions. Today is a no different day with the opening expected between 10620-10650 levels and we have downside open till 10480 levels and on the upside 10720-10740 is a big resistance. So, today also I would wait and watch to see where Nifty will settle down. I would closely watch 10600 to see if it holds or not. If it holds and Nifty closes between 10600-10650 then we can look at some trade happening tomorrow. But for today, it’s going to be a wait and watch.