Tag Archives: Trading Strategies

Market Trade Setup 24th April #NIFTY

The third and the biggest phase of polling is done and we had good polling of 67.41% vs 2014 figure of 67.28% which means we have matched the Modi wave polling and all those who are saying that the polling is less and voters are unenthusiastic need to re-look at their words again. Practically 303 out of 543 seats have polled and the market now knows who is winning and who is not. So, let’s see where it goes from today. US markets closed positive with Dow Jones gaining 140 points but Asian markets are sulking a bit today in flat to negative territory. Hong Kong is down 50 points and Japan is absolutely flat.

Coming to domestics, the polling is over and the higher voter turnout this time indicates that Modi is in the driver’s seat and the higher voter turnout was seen across all states like UP, Kerala, West Bengal etc. Now the focus shifts to a 4th phase which will go to polls on 29th. Another news is the AAP-Congress alliance in Delhi and Haryana did not happen as yesterday was the last day of polls. This also might work in favour of BJP. Lastly, the SC notice to Rahul Gandhi on the Chor remark he made will also create some news. Away from politics, today is another important day for Q4 results with Bharti infratel, ICICI prulife, Indiabulls Housing, M&M Financials, Tata Elxsi and Ultra tech cement coming up with their Q4 results.

On the derivatives front, tomorrow is the monthly expiry for the April series and there are some interesting moves seen. So far we have seen 42.4% rollovers which is slightly higher and what is more important is a lot of FII buying that happened in Nifty Futures and that too for May futures when election results are due. That took the Nifty futures long exposure to 70% and last Thursday it was at 62%. This sudden jump should be seen carefully. n options the Nifty put-call ratio remained steady at 1.30 vs 1.35 seen at the beginning of the day. 11700 call added 11 lakh positions while 12000 call shed 3.9 lakh positions which makes 11700 the highest for this series. On the put side, 11500 put has the highest open interest followed by 11600 put.

What is the Nifty call for the day?

A mildly negative Asia means we are likely to open flat around 11580-11600 zone and this is a strong support zone. If 11570 is taken out then 11520-11550 will be tested. On the upside, 11700-11720 is a strong resistance difficult to overcome. You would have taken long positions yesterday in 11600-11620 mark and today they will give you profits. If the 50 point target is reached then you could exit that position. But I have another trade to suggest now. You can go for a long position in May futures today with 12000 as the target for the election day or the exit poll day. The target can be reached before also. This position can be different from the daily positions you take. There is a chance of 350-400 point profit for the next series and take these positions to benefit from the upmove, which is going to come.

Market Trade Setup 23rd April #NIFTY

Crucial day of the entire April-May election months with 117 seats of 543 seats going for polls today. This is the phase where the largest number of seats are going for polls and with this 303 out of 543 seats would have completed and more or less we will get an idea which way the wind is blowing. So, tomorrow will be a very crucial day for the market and the behaviour of the market tomorrow will more or less tell you who is winning and who is not. But for today the global cues are mostly centred around Brent Crude which went to 6 month high of 74.5 dollars and on its way towards 75 dollars. Added to that Asian markets are subdued and Dow closed in a slightly negative territory losing 50 points.

Coming to domestics, today is the polling day and as told above 117 seats are going for polls and BJP holds 62 of them. From now on, it’s going to be more and more of BJP seats as we are moving towards North India. South will end polling with today, as 1 seat from Tamil nadu, 20 seats from Kerala and 14 seats from Karnataka are going for polls. Apart from that the entire state of Gujarat where BJP holds 26/26 seats is going for polls along with the remaining 7 seats in Chattisgarh. Goa’s two seats are also going for polls today. There are 1612 candidates from 15 states and Union Territories are going for polls. Evening there will be a post from me which will talk more about the 3rd phase. Q4 results are also going to pick up from today as cement major ACC cement along with Tata Global and Sterlite tech are coming up with Q4 results.

On the derivatives front, yesterday was a very low volume day as the participation from the FIIs was minimal due to Easter Monday. The fall coming from a low volume is not a very significant indicator and the Nifty put call ratio fell to 1.35 from 1.71. The volatility also jumped to 24% which is highest in many months. 11700 put shed 8.4 lakh positions, and 11800 put shed 8.8 lakh positions and the only strike which added open interest is 11550 put added 3.5 lakh positions. On the call side 11700 call added 29 lakh positions and 12000 call added 9.8 lakh positions. 11700 call and 12000 call almost have similar open interest of 41.5 lakh and 41.4 lakh respectively, which means either 11720 can be the top for this series or it can go all the way to 12000. With 24% volatility, nothing can be ruled out.

What is the Nifty call for the day?

Yesterday we saw a sudden fall in the afternoon to 11550 levels before recovering and closing just below 11600 mark. I had warned you not to go long if Nifty drops below 11670 mark before 10.30 and at 10 AM itself Nifty touched 11650 mark and I hope you have stayed away from the market. Today is the day where you will go long if you believe that BJP is winning this election. From today we can see a turnaround for next 2-3 days that might take Nifty past 11900 and might even go to 12000 mark. We can start seeing it somewhere today afternoon itself and tomorrow we could see that playing out in full swing. For today, we might open flat around 11600-11630 mark and you can go long here and keep a target of 50 points from wherever you were able to go long. 11700-11720 is a big resistance that it has to overcome, and if that happens then Nifty is on its way towards 12000. All my predictions are based on BJP winning and if the news goes the other way then sees a big collapse towards 11500. 

Market Trade Setup 22nd April #Nifty

Last week of April and the expiry week is here. This week has some very important cues, one being the election and the noise of Rahul’s nomination, sexual harassment charges on CJI and its impact on the key judgments waiting to be delivered and the continuing Q4 results that will impact the companies. On Thursday, US markets closed in the positive territory up 110 points but that is very old news. Yesterday’s terror attacks in Sri Lanka where 200 people lost their lives has a major impact on the growth and stability across the World. Added to that are the worries of rising crude prices for India. Crude oil has crossed 73 dollars and its trading at 73.5 dollars now. Asia today is flat with some markets in a mild positive zone and some in a mild negative.
On the domestic front, the focus today will be the Q4 results of Reliance and HDFC that came on Friday evening and Saturday respectively. After many quarters Reliance has disappointed in its petrochemical business with margins disappointing and even Reliance Jio which was having a dream run till last quarter has seen a fall in growth in the number of subscribers, revenue as well as Average revenue per user. So, overall disappointment from Reliance. That disappointment was made up by HDFC which came up with very good numbers. Added to this we have plenty of news from Amethi, where scrutiny of nominations will take place today and the final decision on the AAP-Congress alliance in Delhi and Haryana will be taken today. Tomorrow is the 3rd phase polls as well as the last day for filing nominations for 6th phase, which includes Delhi.
On the derivatives front, we had the 3rd weekly expiry of the April month and it happened on a good volume and turnover of 21.63 lakh crore and that’s heartening. Now, the focus shifts to the April monthly series expiry which will happen this Thursday. Last Thursday we saw a heavy buying in Nifty futures which indicates that there could be some more upside that market saw on the day when 2nd phase polling was happening. We will have to see its impact going into this monthly expiry. The Nifty put-call ratio, however, came down from 1.82 levels to 1.71. 11400 put added 5.1 lakh positions, 11650 call added 2.3 lakh positions and 11600 call added 1.9 lakh positions and 11500 put still has highest open interest of 28.4 lakh positions. On the call side 11800 call added 6.9 lakh positions, 12000 call added 6.8 lakh positions and 11900 call added 5.2 lakh positions. 12000 call still has the highest open interest.
What is the Nifty call for the day?
After 3 day holiday, we are opening today and the opening might be a bit flat around 11730-11760 zone and 11720 is a support that will come. The 11670-11700 is a big support zone and should hold today. Also, a lot of open interest has come on Thursday for 12000 call and we need to see if it continues. If it does, then we can look at 11850 which is all time high being tested and even broken this week. That might take us to 12000 levels also. A lot, however, depends on the election related fundamentals and we need to look at them carefully. So, for today, I would suggest that if you get a dip around 11720 levels or below that, then go for a long position. If Nifty drops below 11670 mark before 10.30am today, then don’t take any positions. Any dip from 11670-11720 levels would be an opportunity to enter again with 11800 as the target. If you have previous positions then keep 11800 as a target to exit them.

Market Trade Setup 12th April #NIFTY

It was a polling day yesterday for 91 seats across India and it went off well. The voting percentages matched up to the game-changing election of 2014 and conventionally higher voting turnout helps the ruling party and thus BJP will heave a sigh of relief. High voting was observed in Western Uttar Pradesh where BJP holds all the 8 seats that went to polls. Maharashtra also had the poll percentages dropping to 56% compared and all the 7 seats that went to polls in Vidharba are held by BJP. Elsewhere the two seats in West Bengal saw 80 plus percentage polling but polling was less in 5 seats in Uttarakhand where BJP again holding all these 5. Voting was also low in Assam and other northeastern states and in Assam BJP holds 4 out of the 5 seats that went to polls.

So, if we make senses of all these vote percentages and how they translate into seats then the picture we get is mixed. UP matched in its vote share so BJP would have got the vote that it got, but unlike last time this time SP-BSP-RLD are fighting together in these 8 seats and a combined influence will be felt in 2-3 seats and BJP would be looking at these seats with worry. Worries for BJP will come from Assam, Maharashtra and Uttarakhand where the polling was less. Assam has a sizable Muslim population and a drop in voting means BJP voters have not turned up and voted as they did in 2014. Markets will need some time to digest all this and where that leaves Nifty needs to be seen.  In all this CPI, IIP data will be released today after the market hours and so will be the Q4 results of TCS and Infosys coming after markets close.
Coming to derivatives, yesterday was the weekly expiry and we have witnessed one of the flattest expiries in the recent memory. The turnover was also less than 20 lakh crore, something which we have not seen in the last two expiries. The options market buzzed with demand for puts and the Nifty put-call ratio went to 1.47 from 1.33 seen at the beginning of the day. Today is the start of expiry week of 18th April and we again have a 4 day weekly series. 11660,11500 and 11400 puts all added equal open interest and for now 11600 put has the highest open interest but it could change today. Point is 11500 and 11400 are also opening up which means Nifty can go to 11390 levels. On the call side, 12000 call added maximum open interest yesterday but 11700 call continues to have a highest open interest which means 11740 will be a big resistance.
What is the Nifty call for the day?
A mixed Asia and some doubts about which way polling went would mean we open bit gap down around 11550-11580 zone and this is a strong support zone. If 11550 is broken then immediately we can go to 11480-11500 levels and that could trigger a lot of shorting. If Nifty takes support at 11550 and crosses 11600 mark then all is well and we can move forward. Just 1 out of 7 phases is over and we still have 6 phases and nearly 450 seats yet to go for polls. Many things can change during this time and the market knows that. So, I would suggest that if Nifty holds 11550 levels then we can go for a long position with 11620-11640 as the possible targets and those positions can be carried to next week also. But just in case Nifty drops to 11500 and goes below that then wait and watch. Don’t rush.

Market Trade Setup 11th April #Nifty

Finally, the Election Mahotsav arrives. The 7 phase polling that we would see for the next 38 days is going to be breath taking with strategies and counter strategies by the ruling party and the opposition. All in all, we are going to see the most crucial election in the recent time, crucial than the one which happened in 2014, which incidentally was my first election and the first time I cast my vote. The global markets are not looking that positive as Dow closed flat last night and all Asian markets are in red especially the Hong Kong which is down 200 points and Japan down 150 points. Brent Crude is still above 71 dollars and that continues to be a big worry.

Coming to domestics, market movement today will completely depend on how the first phase goes today. Farm distress, jobs and national security are the major issues that we are facing in this election and the first phase today is mostly concentrated in South India. 44 out of 91 seats, which is roughly half of the seats going to polls are from South India, especially AP and Telangana. 60 out of the 91 seats are the rural seats and what rural south India thinks about Govt is important. As such BJP has very less stake in the south and out of these 44 seats in South BJP holds just 4 of them. But things are different in other 47 seats of North, Northeast and Western India. There out of 47 seats BJP holds 34 seats so it is extremely crucial that BJP should try to hold many of them. The big challenge is the 8 seats in UP where BJP holds all 8 of them. All these are from western UP and with SP-BSP-RLD combine, BJP is facing a united opposition.

On the derivatives front, as Nifty fell close to 90 points yesterday, on the slew of bad news for BJP starting with the Supreme court verdict, there was selling that happened in the Nifty futures market. The Nifty long positions which fell to 67% have now fallen to 63% at the end of the day. In the options market, however, the demand for the call continued and the Nifty put-call ratio fell to 1.33 from 1.42 mark seen at the beginning of the day. Today is the Nifty weekly expiry and if we look at the open interest positions, 11500 put has the highest open interest, compared to 11600 put yesterday and 11700 call has the highest open interest. Right now Nifty is at 11584 which is almost the mid point.

What is the Nifty call for the day?

A red Asia means we will also open in the flat zone around 11580-11600 mark and as the options positions indicate today could be a day of volatility where market can test 11500 mark and even might go to 11680 mark. Much of it depends on how the elections of the first phase go, especially in Uttar pradesh and Maharashtra. Yesterday, you would not have taken positions, considering the fall and the volatility that Nifty has shown. If you have not taken a position, its good and do not go for any fresh position now. But if you have ended up taking a position then all that you need to do is to hope that you get a sharp up move above 11650 mark so that you can exit that position. Today is election as well as expiry so its time to wait and watch. 

Market Trade Setup 10th April #NIFTY

Finally, there was a rally in the last hour yesterday much to the relief of many, who were doubting whether Nifty would cross 11600 or would settle down below that but somehow we managed to cross 11600 and went up all the way to 11685 levels and closed almost at the high point of the day at 11671. Globally, however, things are not looking that great. US markets corrected close to 200 points and this is on the worry that came from IMF which has cut the global growth forecast and that seems to be having a major impact across all markets. Added to this is the Trump tweet which talked about imposing trade sanctions, this time on European Union. Asia is also negative today mainly on the IMF growth cut with both Hong Kong and Japan showing 150 points cut each.

On the domestic front, the campaigning for the first phase of elections finally came to an end and a positive close was mainly due to the positive outlook given for NDA that it might come back to power. India Today was the last channel to come up with the forecast and they gave a figure of 263-283 seats for NDA and surprisingly in UP BJP might get 42 seats which was much better than 20 plus seats forecasted 2 months ago. BJP is also doing well in Maharashtra with 40 seats almost the same as what they got last time. The other news today is going to be the IIP and the CPI data that will be released for the month of Feb and March. CPI for March is expected to be around 3% and if it comes in that range it will be a good trigger to look at another rate cut in the June policy of RBI.

On the derivatives front, there has been some selling in the Futures market in the last 2 days which has brought the Nifty futures long positions to 67% from the highs of 71%. This is in a way good as now there are 1/3rd shorts in the system. The options also has seen some trimming of Put call ratio and the Nifty put-call ratio right now stands at 1.42 which is a good level considering that tomorrow is the weekly expiry. Yesterday 11600 put added 5.3 lakh positions and that established 11600 put at the highest open interest which means we have firm support at 11590 levels. On the call side, 11850 call added 6.4 lakh positions and 11800 call has the maximum open interest followed by 11850 call. So, Nifty now has the legs to go up to 11800 by tomorrow. The range is now 11600-11800 mark.

What is the Nifty call for the day?

The positions that you were holding for last 2-3 days finally would have got closed yesterday as Nifty went all the way crossing 11680 mark and that you would have made a 20-80 point profits depending on where you have taken positions. But what is important is that a futures trade is closed, which is very important for small traders. Today the IMF news will give a dip at the opening and Nifty might open around 11620-11650 mark and that also is the support zone. Any correction will bring it to 11590 and Nifty should find a support there. So, it is better to go long at around 11600-11630 mark with 11680-11700 as the target. You can otherwise keep a 50-70 point profit target which can be anytime this week

Market Trade Setup 9th April #Nifty

BJP manifesto took the market down, down to 11550 zones and later recovered to cross 11600 mark and close above that. I was talking about Nifty going to 11580 levels yesterday if the manifesto is not liked by the market and it has happened. If a 11800 close yesterday would have catapult Nifty to 13000 by June, it has now taken away that possibility and we could now see a nervous move ahead and it might want another good news coming from anywhere before it starts to resume the journey again. Globally things were not so great and Dow closed 90 points lower on the forecast that Q1 results for the US are not likely to be in the expected range. Asia is flat to negative with both Japan and Hong Kong down 50 points each and only Singapore and Taiwan are in a mild positive zone.

Coming to domestics yesterday was a clash between BJP manifesto vs Congress’ NYAY. Where Congress focused on the bottom 5% of poor with 72,000 per annum cash transfer, BJP focused on populist schemes aimed at farmers. A slew of measures like a loan at zero interest, farm pensions and cash transfers are going to put pressure on the fiscal health and was not liked by the market that much. Added to this is the pressure coming from Brent crude with crossed 71 dollars now and trading at 71.1 dollars. Rupee also lost 45 paise yesterday and now has reached 69.67 per dollar and all the good work was done to bring it to 68.3 lost out in just 2-3 sessions. Nifty has 20 dma at 11470 mark and that is going to be strong support even if there is some fall happening today. So, we need to look at 20 dma carefully.

On the derivatives front, there was a different reaction in the futures and options market. While there was selling in the day but buying resumed by afternoon in the futures market, the options market has shown one-way traffic and that is the demand for the calls. That has brought down the Nifty put-call ratio from 1.61 to 1.50 and there was the closing of positions seen on many strikes on the put side. 11600 put has the highest open interest at 12.6 lakh while 11500 put also has 12.2 lakh open interest. This is very close so if 11560 doesn’t hold today then we can see Nifty going to 20 dma of 11470 mark. On the call side, 11700 call added 10.7 lakh positions yesterday and it has the highest open interest now at 21.6 lakh. so 11720 is a strong resistance for this week’s expiry. So, unless there is fundamental news, till Thursday expect Nifty to be in 11560-11720 range with a danger of Nifty slipping to 11470 on ant bad news.

What is the Nifty call for the day?
A flat Asia means we will also open in the flat zone between 11600-11620 mark and 11560 continues to be very strong support. Good news might take Nifty to 11680-11710 zones and if that happens, exit positions and book mild profits. Your positions are stuck for almost 3 days now and you need an exit route and let’s hope that this exit route comes today. If things turn to worse and Nifty corrects to 11500 mark, patiently, as things are looking more likely on the upside than on downside in the next 1-2 weeks. No fresh positions to be taken today. 

Market Trade Setup 8th April #Nifty

The crucial period of election finally begins. There was a pre-election rally for 4-5 weeks starting from the beginning of March on the news of possible victory for BJP. Now we have actually entered the 6 weeks of election period where at the end of every phase market will get some cues on the way things are going. Pre-election rally brought Nifty from 10800 to 11700 mark, which is a 900 point gain and will this 6 weeks add another 900 points to take it to the targeted 12500 mark needs to be seen. On the global front, things were flat on Friday with Dow Jones closing almost flat gaining 40 points. The good news coming in was the US jobs data which came better than expected figures and the impact will be shown today. Asia is green except Japan and Singapore which are in the mild red. Hong Kong is the best performing market with 150 point gain.

On the domestic front, the real election period starts this week with first phase polling happening on 11th April. But the more important news is the BJP manifesto which releases at 11 AM today and market will be carefully looking at it to see what would be BJP’s response to Congress promise of 72,000. If BJP doesn’t do anything that spoils the fiscal health but gives something to everyone, then we can see a big rally happening. In other news, this week also kick starts the crucial Q4 and annual results of companies and today is the starting day with Delta Corp coming with its Q4 numbers. The net sales are likely to be above 200 Cr and a PAT of 50 Cr plus. The bad news is from Brent Crude which crossed 70 dollars and now trading at 70.7 dollars. This could start putting pressure on India now.

On the derivatives front, this series is seeing an unusually high premium and this is bound to happen as weekly options were introduced which led to a spike in volumes and cost of holding also has gone up. Friday the Nifty futures premium surged to 90 points from 76 points as there was buying happening with the upward movement of Nifty. The overall long positions have now reached 71% and we are approaching a danger zone where there are fewer shorts and that could trigger a big fall on a slight correction as there are no shorts to be covered. On the options front, The Nifty put call ratio went up to 1.61 from 1.52. 11600 put added 14 lakh positions on Friday and now it has the highest open interest for this week’s expiry followed by 11500 put. On the call side, 11700 call added 3.5 lakh positions and it also has the highest open interest on call side followed by 12000 call. So, for this week’s expiry 11570-11760 are the markers on upside and downside. 

What is the Nifty call for the day?

A mixed Asia means we are also likely to open flat between 11650-11680 zone and till the manifesto comes out Nifty might not cross the 11680-11700 zone and market has kept 11700 and 12000 as the number one and number two in open interests. So, if there is positivity and this fundamental news of BJP manifesto breaks the 11760 barrier then we could start moving towards 11800 and above. But if that doesn’t happen then we might correct to 11600 zone and might find some support there. You already have a position taken around 11600-11630-11680 zone and wait for it to go to 11750 mark to exit the position. For today I suggest no trade and only wait for the position to reach a profitable position before going for new positions. 

Market Trade Setup 4th April #NIFTY

All time high achieved yesterday and that too for just 10 seconds. I think it is the shortest all time highs that is possible in any market. 11760 was the previous all time high and Nifty went to 11761 and then fell. The fall was more in the last one hour of trade primarily due to the sky met forecast on this year’s monsoon. The global markets were positive yesterday with Dow Jones going up for the 5th day and closed in mild green of 40 points. Asian markets are in green, except Hong Kong which is down by 40 points while Japan is up 60 points and all other markets on mild red. Brent Crude however did not go past 70 dollars and has corrected a bit to 69.3 dollars now and the Rupee is going strong and strengthened 32 paise and closed at 68.42 to dollars and now we have a realistic chance of Rupee going to 67 zone.

On the domestic front, the technicals played out in the morning as there was a profit taking that happened as soon as Nifty crossed 11760 zone. But what has triggered a bigger fall was the forecast from sky met for this year’s monsoon which said that monsoon this year will be below normal. Sky met forecast this year’s monsoon to be 93% of LPA which is a 7% deficit from the normal. June is expected to be the worst month with a deficit of 23%, July will have a deficit of 9%. June and July are the sowing months so this can have a major impact on the agricultural production this year. August is likely to be 2% excess while September is likely to be 1% deficit. There was a big correction post this news on the fear of a slow down induced by a bad year. Another news is the credit policy announcement and at 11.45 we will know whether its going to be 50 bps cut or 25 bps cut. 

On the derivatives front, yesterday saw the volumes dropping a bit compared to previous expiries and the turn over on the penultimate day to expiry was under 10 lakh crore at 9.8 lakh crore and we have to see how much we can expect today. In the futures market however the premium on Nifty is very high compared to the average and we have a 76 point premium on Nifty. The Nifty put call ratio in the options market however dropped to 1.42 from 1.52 from the beginning of the day. On put side yesterday there was a huge unwinding of positions and maximum unwinding was at 11700 put that saw 4.1 lakh positions unwinding and 11600 put saw next highest unwinding of 2.3 lakh positions. As a result 11500 put has the highest open interest today and 11600 put is closely behind. On the call side 11800 call added 8.4 lakh positions while 11750 call added 6.7 lakh contracts and we have 11800 call as the big resistance. 

What is the Nifty call for the day?

I had talked about Nifty falling to 11680 zone and a fresh position being initiated there. Yesterday Nifty fell much below that and its now at 11640 zone. If you have taken a long position between 11660-11680 you would be sitting on a minor loss. Today, we might have a good opening in 11660-11690 zone and immediately your positions will be in mild profits. There is a resistance coming in at 11760 which is the all time high and RBI credit policy at 11.45 will decide whether 11760 will be taken out on the upside and we will go to 11800-11810 zone. Otherwise if there is a disappointment we could correct to 11580 levels. So, it is better to have a target of 11750-11770 and exit the positions as soon as Nifty reaches there. This market is on its way to 12000 mark but its not going to be one way traffic. It will be a one step back and two step forward method to reach 12000 mark