What we saw yesterday was a very very bad start to August. 11000 which was supposed to be big support which was acknowledged widely, was broken effortlessly in the same way the 200dma was taken out the day before yesterday. This puts a question in mind, where exactly is the bottom? Overnight things have moved from bad to worse. Trump has announced tariff of 10% on the 300 billion dollar worth Chinese goods and that had a huge impact on Asian markets and every market is in deep red.
Dow started it all with a 280 point fall last night and today Hong Kong is down nearly 600 points and Japan is down 500 points. All the remaining Asian markets are down 1 to 2.5%. Brent crude also fell on this news and it was a record fall since Feb 2016, where Brent lost 6% and now trading at 61.8 dollars.
On the domestic front, nothing seems to be going fine for us. The Auto sales figures that came in for the month of July were a disaster as they came worse than June. Though it was expected the news when it came has left us wondering when the recovery can happen if at all there is any recovery. On the other hand, GST collections for the month of July comes at 1.02 lakh crore vs the required rate of 1.14 lakh crore and this is the only mild positive news that we have.
On the Q1 front also the bleeding continues with Bharti Airtel reporting the biggest quarterly loss in 10 years of 2800 plus crore of losses. Today is a very important day for Q1 where we will have HDFC, ITC, Nestle and SBI are going to come up with their Q1 numbers. LIC Housing will report its Q1 numbers tomorrow.
On the derivatives front, the relentless selling by FIIs continues in F&O market but at the end of the day yesterday some hope returned on the Futures front, where suddenly Nifty futures started to pick up premium, indicative of some buying. The premium which was less than 20 till 3 PM went to 35 points by the time we closed.
However, the FII long exposure is just 28% but on options front, the Nifty put call ratio went to 1.16 from 1.09 mostly by the action in last hour. 11000 put added 7.6 lakh contracts and still 11000 put remains the strike with highest open interest for this week’s expiry. On the call side 11100 call added 13.5 lakh contracts, 11200 call added 11.1 lakh contracts and 11000 call added 10.3 lakh contracts. 11200 call has the highest open interest for this week’s expiry.
What is the Nifty call for the day?
The fall is continuing non-stop and Nifty went to 10880 mark yesterday which completes the 10% correction from 12100 mark and usually, 10% acts as a support. If this holds then we might take support there and go up. But if this level is taken out then 10585 which is the 2019 low seen on 19th February might be tested in the near term. For today, due to the bad news coming from Asia as well as domestically, we will lose 50-60 points from yesterday’s close and open around 10920-10940 zone and that should be the bottom.
If not, then 10880 will be tested again and we need to see if that holds or not. If it doesn’t then we will lose another 150 points and go to 10800 mark. If we take support at 10880, which I feel can happen, then we might recover and test 11000 at least intraday. So, the trade for the day is if 10880-10920 zone is held then take a long position with 10960-10980 as a target, else stay away and see where we end up