Trump changed everything, at least in the near term. The tensions in Iran are simmering and reached a level that is not a good news across globe. Talks of Iran striking US forces and US warning that any retaliatory action by Iran will trigger further strikes by US on 52 cultural sites of Iran.
Meanwhile Iraqi parliament passes a resolution asking US forces to leave its country and in midst of all this Brent crude crosses 70 dollar mark. All this is never a good news for a trade on Monday morning and with FIIs and world markets starting in full force after Christmas-New year holiday, all these are unwelcome triggers. US lost nearly 250 points on Friday and today morning all Asian markets are trading and they are trading in deep red with Japan down 450 points and Hong Kong down 300 points.
On the domestic front, the tensions in Iran will hit India a lot as we have a lot of trade, especially of crude oil with Iran. Its not just the crude oil prices that are the cause of worry, it affects the balance of trade which is the difference between exports and imports. If this goes out of control it will have an effect on our fiscal spending as well as the strength of the rupee and all of this will affect the growth.
Just when we are on the path of recovery with auto sales numbers coming good for December, this is the most unwelcome development. Technically, 12130 is the 200dma and that should come as a support for any fall and on the upside the 12293 mark which is the all time high will stay for some more time. Any breach of 20dma will take us to 50dma which is placed at 12000 mark now.
On the derivatives front, Friday saw a lot of bearishness in the F&O markets, as FIIs sold 250 cr in the futures market. It is interesting to know that FIIs were buyers in cash market. This felling in futures has brought the premium down to 26 points from 52 points and the overall long positions fell from 54% to 51%. Now, we have almost equal number of longs and shorts. In the options market also there was bearishness as 4 puts were bought for every call, and 2 calls were written for every put. For 9th expiry, 12100 put added 4.2 lakh positions while 12000 put added 3.3 lakh positions and 12200 put and 12000 put both have highest OI on put side. On call side 12250 call added 7.1 lakh positions and 12200 call added 5.5 lakh positions and 12300 call has highest OI indicating a 12000-12300 expiry range for this series.
What is the Nifty call for the day?
The only thing that will determine the trade today is the tensions simmering between Iran and US. Globally every market is getting affected by it and we are no exception. All that everyone is hoping for is some good news, but nothing is in sight as of now. We are likely to open below the 12200 mark today around 12180 and we will have a support first at 12130 which is the 20dma.
If that support holds then Nifty will stay above 12100, but if it does not hold and fall continues, then next support will be 12000 mark and whether you will see that today or tomorrow, time only can tell. Today is not a day for any trade, just stay aside and see where this slide will come to a halt.