If you look at Nifty yesterday, it followed the range of 11250-11350 and 11400 which is the 50dma can hold as a resistance now. We had a close just above the 11350 mark and now we need to see whether it will be in the 11100-11400 range or will it break free and go above that.
Let me tell you its not that easy to cross the 11400 mark and with the border tensions simmering around with China the task becomes all the more difficult. Globally also things are not as positive as they were a week ago. US markets were not trading yesterday and that way we dont have any cues from there. The dollar index which is a benchmark for money flow into the emerging markets has started to surge again, which coincides with FII selling from. A weaker dollar pumps in money and a stronger dollar takes away the money from equities.
On the domestic front, Bank Nifty will be more in focus than anything else, as we have the Kamath panel committee coming up with its recommendations on debt restructuring. It has recommended restructuring based on 5 financial ratios out of which 2 are leverage ratios and another 2 are liquidity ratios. These ratios have to be achieved by March 2022.
Today everyone would be working on these ratios to see the health of companies. But the bigger worries are at the Ladakh borders where there is news of firing that was reported. So, China is back in the news and one needs to look at the developments very carefully from here. 11100 is the support for any fall that is going to happen from here on any adverse news and that level wont be broken unless the news is alarming. On the upside 11400-11450will be tough to cross with so many uncertainties around.
On the derivatives front, there was some bullishness seen in the Futures market as there was 25% more long positions taken on Futures compared to shorts. That took the overall Nifty long positions from 54% to 58%.
On the options front however, the action was more neutral. On the buy side more calls were bought compared to puts and on the sell side more puts were sold compared to call and this kept the Nifty PCR almost stable at 1.23 vs 1.22 seen at the opening time.
For 10th expiry 11400 call added 7.1 lakh positions, 11600 call added 5.9 lakh positions and 11300 call added 4.4 lakh positions and 11600 call has the highest OI on call side. On put side 11300 put added 6.5 lakh positions while 11200 put added 6.2 lakh positions and 11000 put added 6.1 lakh positions and 11000 has highest OI indicating 11000-11600 as the broad range for expiry.
What is the Nifty call for the day?
Today’s trade is more dependent on the news on China and its tough to predict where it will open. SGX which was 40 points higher when I started to write this post is just 1 point up right now. So, wherever we open, 11350 is a mark that one needs to look at. If in the first hour of trade Nifty is around 11350 not breaking it, then take a long position with 11400 as the target.
If Nifty remains weak and goes below 11350 and trades below that, then you can go for a short position with 11250 as the target. The short trade has more chances of making money than long trade. If China news keeps flowing, short trade will work. If we get no news at all then long trade might work. If you are not comfortable with this two side trade, then you can sit out and avoid trading today.