Market Trade Setup 3rd June #Nifty
June month has actually started now and we have started on the best way possible, big fall in Crude prices. Crude oil which was around 72 to 73 dollars 10 days ago now fell to 60 dollars. In 2014 also, after the elections when Modi Govt was formed crude corrected almost 40% and now we are on our way down again and already crude lost almost 15%. So, there is a Modi factor for the crude oil also.
Globally, things are very bad as worries of global trade wars and falling bond yields are looming large and Dow lost 350 points on Friday. Today morning Asian markets are also in deep red with both Hong Kong and Japan down more than 200 points. Brent crude which fell to 60.9 dollars early morning is now trading at 61.1 dollars.
On the domestic front, GDP numbers came out on Friday and it was very bad news with GDP growing at 5.8% for Q4 and 6.9% for FY’19. This is much lower than the market expectation of 6.2% or above. Agriculture was a disaster with a negative growth of -0.1% and other sectors like manufacturing and services also not performing that well. Added to that are the Auto sales figures for May that came very disappointing.
The heavy commercial vehicles like Tippers and Tractors which form the backbone of the economy have seen a fall. This is again disappointing and let’s see how market will take these two bad news. Another news that market has to digest is the extension of PM kisan yojna scheme to 15 Crore families which will cost 1 lakh crore per year.
On the derivatives front, Friday, saw a sudden fall after the announcement of the cabinet portfolios. Thursday long positions were taken expecting Amit Shah to take over Finance but when he became Home minister markets went on a sell off mode and never really recovered from there.
There was some buying in the futures in the late afternoon but options market saw demand for calls and Nifty put call ratio came down from 1.64 at the beginning of the day to 1.43. 12200 call added 8.7 lakh positions followed by 12000 call that added 8.3 lakh positions and 12100 call added 7.6 lakh positions. 12000 call has the highest open interest followed by 12200 call. On the put side 11800 put has the highest open interest offering the support.
What is the Nifty call for the day?
Today is a day where Nifty has 3 negative factors and 1 positive factor. Bad GDP numbers, bad Auto sales and trade war tensions are the negative factors but the Crude oil falling from 69 dollars to 61 dollars is the only positive factor and Nifty has decided to ignore the negative factors and focus only on falling crude at least for the opening.
Result is we will open positive around 11940-11970 zone and we might again go to 12000-12020 zone which is a resistance point. If there is a fall then support will come at 11850-11880 zone and we need to see whether we will test that or not. For today, I suggest a long position only if Nifty sees a dip towards 11920 and you need to exit this at 11980-12000 mark. Otherwise also dont look beyond 40-60 points gain.