Last two days have been narrow range days but towards the end, both days saw a dramatic recovery on Nifty. Yesterday, 12280 was touched and just when things were looking as if the close will be below 12300, we had a recovery that took Nifty to 12350 levels again. The texture of the market looks firmly buy on dips and the global factors are also suggesting the same.
The US-China phase I trade deal has been signed and that is a huge relief for the time being. Dow celebrated it with a gain of close to 100 points and closing above 29000 for the first time. According to the deal, China will buy 200 billion dollars worth US goods in the next 2 years. Asian markets are also in green with Hong Kong up 120 points and Japan up 50 points. Brent crude is still at 64 dollar mark trading at 64.4 dollars.
On the domestic front, the big news that came in yesterday was the trade deficit data for December that came in at 11.25 billion dollars vs 14.49 billion seen last year. This was primarily on the sharp fall in imports to 38.6 billion from 47.2 billion seen in the same month last year. Exports also fell for the 5th month to 27.3 billion dollars. One point that comes of this data is the slowdown that is clearly visible as the demand for imports shrinking.
The other news that will be watched is the cabinet committee meeting on economic affairs that can make some crucial announcements today. Markets will wait for them. Meanwhile technically, the market is expanding slowly and the roof is at 12370 mark while 12205 which is the 20dma will be firm support and Nifty should move in-between this range today.
On the derivatives front, today is the Nifty weekly options expiry but the cues don’t look that bullish. Yesterday saw a 120 Cr selling in Nifty futures and the overall long positions are back to 51% from 54% seen at the beginning of the day. More important is the action on options market and there also there is shorting seen in calls and buying of puts that brought the PCR to 1.55 from 1.68 level seen at the beginning of the day yesterday.
12300 put saw an unwinding of 5.5 lakh positions while 12250 put saw 2.8 lakh positions getting added. 12300 put still has the highest open interest on the put side. On the call side, 12450 call added 3.7 lakh positions while 12400 and 12350 call added 3.3 lakh and 2.6 lakh positions respectively and 12400 call has the highest OI making it a 12300-12400 expiry range for today’s expiry.
What is the Nifty call for the day?
Yesterday we saw a recovery on the Nifty in the last hour to 12350 mark and closed there and today we are likely to open in the same range of 12330-12350. Today is the options weekly expiry and that could induce a lot of volatility. Nifty can find support at 12320 and below that at 12280 levels which are also yesterday’s low point.
On the upside 12380 is a resistance which is tough to break for today. So, the trade for the day is to go for a long position at 12320 mark with 12370-12380 as the target. Understand that this is not a market to short and any dip should always be bought but not sold.