With just 7 plus weeks away for US Presidential elections, we are seeing sell-off. NASDAQ which was making all-time highs on record basis lost 10% of its value in last 3 trading sessions. Dow Jones fell 600 plus points yesterday on the back of a huge fall of 20% on Tesla and 7% on Apple. Clearly the American markets are preparing for a big pre-election correction and NASDAQ has started it and will Dow follow it or not needs to be seen.
Today morning, Asia has taken the cue from the US and started to fall. The major reason for that is the strengthening of the Dollar index which has crossed the 93.5 mark. Just a week ago it was below 92.5 mark. This sharp surge in the dollar index has put entire Asia in red and we have Hong Kong down more than 350 points and Japan down 300 points. Only good news is Brent crude which fell below 40 dollars, trading at 39.5 dollars.
On the domestic front, the tensions in LAC has kept Nifty on tenterhooks yesterday and we were gravitating between 11300-11400 mark and crashed in the last one hour to close around 11300 mark. We have negative global factors and negative factor in terms of China, so there is nothing which to move the markets up. FIIs has been selling a lot and yesterday they sold more than 1000 Cr in the cash market.
Huge selling was seen in stocks like Airtel and DIIs are not buying to match up FII selling. Technically, we are in the 11100-11400 zone which is the 50 and 20 dma zone and protecting 50 dma of 11100 is critical for Nifty to regain the 11500 mark and go above. If by any chance 11100 is taken out then we will immediately go to 200dma of 10800 and that would mean all those who entered the market in the last 2 months, will be in the red zone.
On the derivatives front, a very interesting trend was observed yesterday in Futures. The Nifty overall long positions went up from 58% to 59% even if there was the unwinding of long positions. It is because more short positions were unwound than longs. That means there is a section which believes that 11250 is a level from where Nifty could bounce back. Let’s see if that happens or not.
On the options front, the Nifty PCR remained stagnant at 1.22 vs 1.23 at the beginning of the day as there were more calls written and more puts bought. For tomorrow’s expiry 11600 and 11500 has the highest OI indicating hope that we might go there with a sudden upmove. On the put side, 11000 put has the highest open interest and no other strike is closer to that. So, expect a very volatile expiry where we could see a swing between 11000-11500.
What is the Nifty call for the day?
These are tough times to trade and when everyone believes that markets are going down, they actually go up. There is a gap down that is expected in line with Asian markets and we might open around 11280 levels and 11250 is the major support we are looking at. In the first hour of the trade if Nifty is above 11250 then we can actually take a long position in this negative market with 40-60 point target.
You can take that even if Nifty is around 11300 mark. The upside resistance is at 11350, so you need to close your positions below that. If in case Nifty breaks 11250 in the morning, then no trade. Shorts are risky now and if Nifty breaks 11250 then stay away from the market and wait to see where it ends and then prepares for a fresh trade tomorrow.