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Market Trade Setup 30th November #NIFTY

Market Trade Setup 30th November

December series has finally started and we have started on a fantastic note which pushed Nifty up 743 points making it the best series in 32 months!!! Though on the last day my call ended on a losing note am not complaining as we have made a lot of money and Nifty also went up. Winning and losing is a part of the game but its the trend that matters most. December is starting with G 20 summit, where Trump and Xi-Ping are meeting and this US-China trade talks will be the big focus. Everyone is eagerly waiting for this and our PM, Modi is also there and likely to hold talks with the US and Chinese presidents. The US closed flat on this news and today Asia is also trading mixed to flat anticipating which way the trade talks go in G-20 meeting in Argentina. 

On the domestic note, today is also the day when the GDP figures for the Q2 will be out. Though the results will come after the market hours at 5.30, market will have some anticipation as to where the number might come. The IIP numbers for Q2 came in at 6.5%, 4.7%, 4.5% in the three months which is almost same as Q1 months but the major factor is the corporate results of Q2 that came in almost flat at 2% compared to 12% seen in Q1. This according to me could be the crucial factor. Q1 has seen a GDP of 8.2% but matching that in Q2 is going to be tough. Q1 figure of 8.2% came from lower base of 5.6% seen in Q1 of last fiscal. The Q2 figure in last fiscal was 6.3% and that makes the base bit tougher so considering all these factors I can expect a GDP of 7.2-7.5% and agriculture GDP is going to be crucial and that could change things. 

What to expect from the December series?

Finally December series is here and last three december series have been positive with gains ranging from 1% to 2.5% and we had a 7% gain in November and will December also follow it up with same gain or not needs to be seen. The crucial factor is the election results on December 11th. Like Diwali which came at the mid of this series, election results also are coming at the mid point. I would thus like to divide this series pre results and post result part. If there is an uptrend till 11th then we might see some sell-off post the series. 

10500 put and 11000 call have the highest open interest to start with, but 11500 also has a good amount of open interest and so does 11200. So, the first part of the series if there is a rally can go to 11200 or even 11500 levels. Similarly, if there is a fall then we can test 10500 levels and in worst case 10200 levels. The series is also starting with 51% long positions vs 29% in November so there are more longs than shorts in the Futures market. The Nifty put-call ratio is also starting off at 1.72 which is over the heated zone and the overall roll overs from November to December is 71% which is higher than the average of 68% seen for the year 2018.

What is the Nifty call for the day?

Today is the first day of the series, Nifty will open bit gap up at around 10870-10900 levels and where it goes from there needs to be seen. There are too many fundamental factors affecting the market so for me today will be a wait and watch day. No positions to be taken, even if you see Nifty moving to 10950 after open. Keeping money safe is better than losing it taking risks. 

Market Trade Setup 29th November #NIFTY

Market Setup 29th November

Finally, we are on the expiry day for the 11th series of this year. What a way to end the series that started at 10070 levels with a big doubt on which direction the market will go. There were many who talked about 9500 levels and historically November was not a good series. Added to that is the Dovish statements by US Fed where they indicated that the interest rates would not be disturbed that much and they would observe the growth bit more carefully has pushed the Dow Jones up more than 600 points and the Asian markets are in the green. Added to that is the Brent Crude which as now fallen to 58.8 dollars on the back of Saudi Arabia which is refusing to cut the output.

On the domestics, the behaviour of the market from 2PM yesterday, we have seen a rally which indicates that BJP has done reasonably well in Madhya Pradesh and has pulled itself well in Malwa region where Congress was expected to make some gains. The SGX also is suggesting a 90 point growth which is 0.8% higher while Hong Kong and Japan are up 0.2 to 0.4%. This also says that the final unofficial numbers that would have come after market hours would have gone decisively the BJP way. Today is the expiry and so its the expiry factors that would play a major role. There was some re-casting done on GDP which I would keep it for later date.

Coming to the derivatives market, yesterday was an out and out bullish from afternoon and the Nifty put call ratio is at 1.81 which is now the bubble zone and on the expiry day it is usual. The series will come to an end today, so this is not a major factor. As predicted yesterday 10800 emerged as the strike with highest open interest on the call side and on the put side a lot of confusion is emerging and 10600 which remained till 2.30PM has given up and today it might again come back. But things are going to change rapidly when there is a gap up of 80-90 points that happens now.

What is the Nifty call for the day?

November series so far has seen 603 points gain and that means this is series belongs to bulls and now it is 6-5 in favour of bulls. The opening today is going to be at 10800 level which is where lot of short positions were taken and any expiry above 10810 level means lot of people will lose money. So, we need to see what happens between 10810-10830 zone. If there is a fall then 10750 might come as a support.

Following are the possibilities that can be visualized now

1. Opening at 10800, Nifty being in 10780-10830 zone till afternoon and a big 3PM move down to 10750 and an expiry at 10780 levels. This looks most probable now.

2. Opening at 10800, Nifty going to 10850 levels and then a 3PM move to 10780 and a close around 10800-10810 levels. 

3. Opening at 10800, quick fall in Nifty to 10750, spend rest of the day between 10750-10780 zone and 3PM move on upside taking Nifty to 10830 and close around 10800-10820 zones.

4. Opening at 10800, quick fall to 10750, spend rest of the day between 10750-10780 and a 3PM move down to 10720 and close around 10740 levels.On the back of these, I suggest you to keep the short strangle intact and dont take further positions. Today might not be as exciting as other expiry days are going to be.

So, I suggest no trading today, just observe and see how expiry pans out.

Market Trade Setup 12th November #NIFTY

Market Trade Setup 12th November

The Third week of the November starts and now we are entering into the second half of the month. The first half has been really good for the market that fell 1500 points in 2 months, we have seen 500 point recovery in 2 weeks. Now its at the cusp of 10600 and its a point from where Nifty has to decide whether it wants to go up or re-test 10000 level again. Globally things are not looking very great as dollar index surging to 97 and risk aversion coming into the market. Bonds are getting more attractive than equities and that has pulled Dow Jones down 200 points and Asian markets are more or less flat and Brent Crude is again moving up after touching 69. It is now exactly at 71 dollars.

Coming to domestics, we have a lot of fundamentals to take care of in the second half. The Q2 results season has come to an almost end, with the stock like Britannia reporting their results today. This Q2 has been a disappointment where the growth has been almost flat and thus the Nifty EPS is now likely to be around 10-11% vs an expected 15%. The second major fundamental is the elections starting from today. The state elections in 5 states will start today and end with the result declaration on 11th December which is exactly 1 month away from today. So, a lot of cues will be available for the market to react. Then we also have the September IIP numbers and October CPI and WPI inflation numbers coming in which will also affect market a bit. So, these are the fundamentals to trade for this week.

Coming to derivatives market, the action will now slowly start moving to options market. The Nifty put call ratio in the options market moved to 1.60 from 1.59 even as Nifty closed on a flat note, down 15 points. Firstly there was some unwinding of positions on put side 10000 put saw 1.4 lakh positions unwound and 10200 put saw 1 lakh positions unwound. 10100 put added 4.7 lakh positions which are mostly longs which were taken as hedge to the bullish positions taken. 10500 put added 1.2 lakh positions on the put side and 10000 put continues to have highest accumulated open interest followed by 10200 put. On the call side 11000 call added 3.1 lakh positions and 10800 call added 2.5 lakh positions. 11000 call is now having the highest accumulated open interest and 10800 call and 10700 call has similar open interest. So, 10800 could be a resistance now.

What is the Nifty call for the day?

We will have a flat start today for Nifty around 10560-10580 range and on the down side 10520-10550 is the big support and upside could go all the way to 10650-10680 levels. So, I would suggest you to take a long position at a dip towards 10550 levels with 10650 as the target to be achieved this week itself, if not today. There is a condition where options data is suggesting a support at 10000 level and 11000 as resistance for this series and Nifty is right in the middle at 10580 level. So, another strategy is a long straddle that can be taken at 10550 level with 290 rupee combined premium. You can exit the positions with 10700 on the upside and 10400 level on the downside whichever is achieved first. This position can also serve as a hedge to various other Futures and options positions we are likely to take during the rest of the series.

Market Trade Setup 9th November #NIFTY

Market Trade Setup 9th November

We are back to open again after 2 days Diwali break and today is the last day of trading for the second week of November and starting from Monday we are into the second half of the month and the question is will we continue the positivity we saw in the first half going into the second half? Trump lost the Congress but he retained Senate with a bigger margin and that should make US midterm elections an even game between Democrats and Republicans. The Dow closed absolutely flat yesterday with a 10 point gain and the Asian markets are mildly in red today with Hong Kong down nearly 500 points and Japan down 150 points. The dollar index is at 96.7 and that will put some pressure on the rupee.

Coming to domestics, the result season has almost ended now and it has been a very average results season and now the action shifts to the state elections in 5 states for which the results are coming on 11th December which is a month away. So, the next one month will have this fundamental playing in market’s mind. Yesterday two surveys were done by India today and Times Now have given a slight edge for BJP in Madhya Pradesh but Rajasthan seems to be going to Congress. How market perceives this needs to be understood so expect some uncertainty in few days. The best news is however is coming from Brent Crude which now dropped to 70.6 dollars and that would mean Govt will have more room to play around with Petrol and Diesel prices.

On the derivatives front, there was good buying seen on the Mahurat session and for the first time in 10 years Nifty closed in green on the Mahurat trading day. The overall long positions in Nifty futures is at 37% and it has improved from 29% seen at the beginning of the series. In the options market also the Nifty put call ratio is back to 1.58 levels which normally markets with bullish outlook will have. 10600 put added a maximum of 3.5 lakh positions while 10400 put added 2.2 lakh positions and 10500 put added 1.9 lakh positions. On call side 10700 call shed 3.2 lakh positions. 11000 on call side still has maximum accumulated open interest while 10000 put has the highest open interest and now this will start correcting. 10300 is adding a lot of positions and so is 10700 call. So, can we see the second half between 10300 and 10700?

What is the Nifty call for the day?

A red Asia means we will open around 10580 levels and 10550 is a support that it should hold on to. If that is taken out see 10480-10500 as the support zone. On the upside 10620-10640 is a very strong resistance zone and today should be seen as a day to test the waters for the second half. All our previous positions have been closed with profits and fresh positions can be taken only after confirming the trend. As of now, there is no clear trend today and with election fundamentals coming, let’s not jump into any positions now. Let’s wait and watch and if there is anything, I would tweet it and you can take a position. Else, you can wait till Monday to start afresh.

Market Trade Setup 1st November #NIFTY

Market Trade Setup 1st November

November starts on a very good note. The worries of RBI have been temporarily put to rest. A storm in the tea cup caused mainly by media has taken away 100 points and added 200 points to Nifty by the end of the day. As we step into the winter month of November, things are looking up but how long will it stay needs to be seen. Dow Jones closed more than 240 points up last night adding more than 650 points in last two days and today morning Asia is looking green with Hong Kong up by 400 points and so there is no worry for Nifty. Adding to this is the fall in Brent Crude will be furthermore positive to India. Brent Crude is now below 75 dollars trading at 74.7 dollars.

Coming to domestics, its the Q2 results are in the forefront now. L&T declared fantastic Q2 numbers, putting rest to any problems in the engineering and construction sector. Added to this are the positive numbers from ABB another engineering company which gave good results. On the banking front, Canara bank declared good results and nicely followed up Bank of Baroda which also declared good numbers. Added to this is the news of ease of doing business report that came yesterday showed India jumping 23 places to reach 77th place from 100th place. 6 out of 10 indicators have shown improvement with construction permits showing the maximum jump. The worst performing indicator was however tax payments.

Another fundamental that we face is the October Auto sales numbers coming today and tomorrow. 4 wheelers are set to drop their growth due to subdued festival demand. The main reason is the late start to festival month this year. Added to this is the high petrol and diesel prices which reduced the demand. The passenger cars segment is likely to show a low growth of 4% while two wheeler sector is expected to perform slightly better showing a 10% growth. Maruti is one company we need to closely look at as any drop in the sales will affect the stock price. Hero and TVS in 2 wheeler space will be in focus today, so is Eicher and everyone will look at the sales of Royal Enfield during festive month.

Following are the Q2 results expected today

1. Adlabs
2. Amrutanjan
3. Apollo Tyres
4. Bajaj Electricals
5. Berger paints
6. DLF
7. Godrej Properties
8. Hindustan Petroleum
9. Taj GVK
10. Tata Communications
11. Thomas cook holidays
12. Timex
13. Zuari cements

On the derivatives front, yesterday was a day when there was an all round buying when nothing happened on RBI front. The long positions on Nifty futures jumped from 32% to 34% during the mid day and the premium on futures also went up. The options market also showed bullishness with Nifty put call ratio jumping to all time high in this series of 1.55. 10300 put added 3.1 lakh contracts, 10200 put added 2.6 lakh contracts while 10400 put added 2.8 lakh contracts and 10000 put added 2.5 lakh contracts indicating that base is now getting built around 10000 and 10200 level. On the call side 10900 call added 3.6 lakh contracts.

What is the Nifty call for the day?

Lots of positive cues will make Nifty to open gap up above 10400 levels near 10410-10420 zone. I am looking at a positional call today because the risk reward might not work positively for an intra day trade. Yesterday’s intraday trade would have worked fantastically for you and at any point you would have got your 50 point profit. Today you could look for a dip towards 10400 during any part of the day and look for a positional target of 10500 to be achieved anytime in next few days. If you dont get an opportunity to enter today then I would advise patience. If Nifty closes below 10450 today you will still get a chance to enter the market tomorrow also. But dont take long positions beyond 10420 as the upside might be limited today.

Market Trade Setup 30th October #NIFTY

Market Setup 30th October

It was a perfect start to a Monday and the first week of the new series. We had a 220 point gain on the nifty and if you were worried about the positions you took around 10130 and felt trapped, yesterday’s move would have released you from the trap and you would have met your targets. These are volatile days and last night Dow Jones moved 900 points intraday where at one point it was up 300 points up and at another point it was almost down 600 points finally to close at 250 points down. Trump is planning further import taxes on Chinese goods and that will also increase the trade tensions. Today morning Asia is moving between red and green not able to decide where to settle. So, we have confused cues to start the day.

On the domestics, yesterday was a day driven by fundamentals of good Q2 earnings and some of the big companies that have declared good results on Friday and Saturday were reaping the benefits yesterday. The Q2 numbers were not that great yesterday and most of the fundamentals that were looking good yesterday no longer look attractive and how much the market will move from here needs to be seen. Today there are some very important banking and FMCG stocks that are coming up with their results and that will have some impact on the market. Plus the positive news today is the Brent Crude which is still below 77 dollars per barrel and that will keep the mood positive.

Following are the Q2 results expected today

1. ABB
2. Alembic Ltd
3. Bank of Baroda
4. Bhushan steel
5. Borosil
6. Container Corporation of India
7. Dena bank
8. Emami Ltd
9. IDFC
1o. IRB Infra
11. JK Tyres
12. Naukri
13. Symphony
14. Talwalkers
15. Tech Mahindra
16. Vakrangee

On the derivatives front, yesterday was a big day in the futures market where lot of long positions were taken during the middle of the day and the short positions got initiated in the afternoon. With this the overall long positions moved to 31% from 30% at the beginning of the day. In the options market the nifty put call ratio jumped to 1.51 from 1.44 seen at the beginning of the day. 10200 put added maximum of 5 lakh contracts followed by 10000 put that added 4.7 lakh contracts. On the call side there was unwinding and 10500 call unwound 2.1 lakh positions followed by 10100 call that unwound 1.8 lakh positions. 11000 on the call side and 10000 on put side still continue to have maximum accumulated open interest.

What is the Nifty call for the day?

A mixed Asia means we also will open a bit gap down around the 10220 mark and that 10150-10180 mark is a very crucial support zone for the Nifty on the downside and we will look at the first one hour very closely for the protection of this mark. If Nifty negotiates this well and doesnt correct much and stays above 10180 level then it makes sense taking a long position with 10230-10250 as the target today or tomorrow. Today, however any rapid movement on Nifty can take it to as high as 10300. The timing of your long position should be crucial and look at the strength in 10180 and then only take the long position, even if it means you take this position even in the last hour of the trade.

Market Trade Setup 25th October #NIFTY

Market Trade Setup 25th October

Finally, the series that was the most treacherous this year is coming to an end. Finally, expiry day is here and we are going to start on another negative note. There was a massive sell-off in the global markets yesterday and that started off with Europe yesterday afternoon. What started off as a minor sell-off became a major 600 point fall for Dow Jones which is the biggest fall for Dow this year and with this, it practically erased all the gains made this year. The main reason for the fall is the increasing inflation which it is feared, will result in an increase in interest rates thus moving money from equities to bonds. Asia also followed the trend and Japan is down almost 700 points now and Hong Kong is down nearly 500 points. All the markets in Asia are in deep red.

Coming to domestics, today is the expiry day and this series clearly belongs to bears as the fall is almost 753 points till now. This if we compare to 700 points in the last series we are almost 1500 points down in two months. This will make it 5-5 for bulls and bears and we start November with almost no gains. We were at 10500 in January and right now we are at 10200 and that means we are losing almost 3% of wealth year to date. The positive series did not gain as much as the losses that negative series has had. February, March, September and October all the series lost more than 500 points. The only fundamental that is positive for us is Crude oil which has now gone to 75.4 dollars from 76.5 dollars yesterday and that brings no cheer for the market.

Coming to derivatives, there was a lot of volatility in the futures market as the market started to fall, rise, fall and then had a major up-move in last one hour. The roll overs in Nifty futures were higher than average at 65% and with still a day to go, there is a belief that November series will be better than October. Options market also has a different story to tell as Nifty put call ratio moved back to 1.10 from 1.04. There were some short puts taken at crucial levels and that resulted in PCR moving up. 10000 put added 5.9 lakh contracts and still, it continues to be the base for the market. On the call side, however, the base shifted from 10500 to 10400 where there are 30.3 lakh open positions compared to 30.2 lakh positions at 10500 strike.

What is the Nifty call for the day?

A red Asia means we will also open in deep red around 80-100 points lower and that means we will start at 10150 mark. There are few scenarios that can be built from here.

1. Nifty starts going up from 10150 go to 10250, stabilize there have a 3PM move which takes the market to 10300 and close just below there. The other scenario is a fall from 10250 at 3PM and close above 10200 but below 250.

2. Nifty remains in 10150-10200 range for a long time till afternoon and then have a 3 PM move up that takes it to 10250 and close between 10200 and 10250. The other scenario is a fall from 10200 back to 10150 and closes below 10200 mark

3. The Nifty starts to fall again and test 10100 and remain there till 3PM and a 3 PM move upwards taking it to 10150-180 zone and expiry t 10150 level. A downward 3 PM move will make it close below 10100 mark above 10050 mark

4. This is a dreaded scenario where there is a fall below 10100 and a 3 PM move sharply taking it below 10000 mark and might close below 10000. This is a remote but a 5% probability. So my call for the day would be to stay out.

I have given you a buy or a sell call in 8 out of 10 expiries this year and today am asking you to stay out. Expiry days are good to trade but with so much volatility around, money in the pockets is better than money thrown into a whirlpool.


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 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.