It was a flat close yesterday but those of you who were expecting to make money on the long side is trapped and if you have taken positions around 12020-12050 mark then you would have been trapped as Nifty closed in the same range. It opened high, crossed 12100 that we were talking about but never went again there. So, not every dip can be rewarding, at all times.
Globally, things are looking bad as Trump tweet to punish Brazil and Argentina increasing the tariffs on steel and aluminium products. This is in retaliation to the massive devaluation of the currencies of their currencies which is acting negatively for American farmers. The result is Down closed nearly 270 points down and today morning Asia is also in the red with Hong Kong down 100 points and Japan down by 200 points.
On the domestic front, yesterday was a day of digesting the GDP data, the core sector data which was bad and the auto sector data which was slightly positive. Nifty has taken it in its stride and we did not see Nifty collapsing and it found support around 12020 mark which is good for the bulls. This means selling is still not on the agenda and if this support holds then we can look at Nifty moving forward. 11970 is the 20dma and should come as strong support even if Nifty goes below 12000-12030 support levels.
On the macro news, the 3-day MPC meeting of RBI will start today and we will be having the credit policy on 5th December. What needs to be seen is how much MPC will cut the repo rates and what would be the GDP forecast for the full year after the Q2 GDP is out, and also the inflation forecast for the full year of 2020.
On the derivatives front, yesterday was another bearish day in the futures market as the selling continued and FIIs sold over 500 Cr in Nifty futures. This has brought the Nifty overall long positions to 51% from 54% and we began December at 60%. On the options front also there was more call selling and that brought the Nifty PCR from 1.54 at the beginning to 1.44 by the time we closed.
For Thursday’s expiry 12000 put added 4.7 lakh positions while 11900 and 12050 put added 3.4 and 3.3 lakh positions and 12000 put has the highest OI on the put side. On the call side, 12100 call added 5.9 lakh positions followed by 12150 and 12250 call both added 4.1 lakh positions. Even 12300 call added 3.2 lakh positions. 12100 call has highest OI on call side but 12150 and 12200 call are also picking up in OI making it 11900-12200 as the broad range for expiry.
What is the Nifty call for the day?
After a narrow day yesterday, we are going to have another flat start today around 12040-12060 range and again we have the support coming in at 12000-12030 range and the resistance around 12080-12100 mark. Today, you have to play both ways, depending on what Nifty does. If after opening, like yesterday, it goes to 12080-12100 levels then go short with 12030 as the target.
But, if Nifty goes down after opening and takes support at 12000-12020 mark then you can go long there with 12080-12100 as the target. 11970 is the final support and just in case if Nifty breaks that, then stay away from the market.