The fall finally comes on the penultimate day of the expiry day and now we have 10500 as the sacrosanct level that will be protected in this series. I told you that 61.8% fib retracement is a very powerful number and you need a big fundamental to cross it and looks like this wave of liquidity is not sufficient enough to take it beyond 10500 mark.

Now we have the global markets also which are on the sell-off mode. Asia closed almost flat yesterday and we started to fall after Europe opened 1.5 to 2% down and Dow also picked it up from Europe and lost 700 plus points. This was on the back of the 2nd wave of COVID infections in the US, especially in California and Texas. Asian markets are reacting to that and all of Asia is in red with Japan down more than 200 points. Brent crude also lost out 6% in trade and it is below 40 dollars trading at 39.6 dollars.

India News

On the domestic front, the two things that would worry us today are the spree of boycotts and order cancellations that are happening to different Chinese imports and second is the IMF forecast for Indian GDP. IMF forecast that GDP will contract 4.5% for this fiscal but would grow at 6.1% in the next fiscal. Both are negative news, if they get added to the global sentiment we might have a bigger correction than others. So, what are the technicals saying.

Interestingly the 20dma and 100dma are converging now around the 10000-10050 zone and that will be big support for any further fall. Breaking this level might take us to the 50dma of 9500 levels. On the upside 10300 will offer a temporary resistance and if we take that out then 10500 is a mountain that Nifty has to climb. So, we have a 10000-10300 range that we might trade in today.

Derivatives Action

On the derivatives front, today is the expiry day and yesterday we saw a record turnover for penultimate day and turnover crossed 22 lakh crore. Today for sure we will cross 30 lakh crore and how high we go depends on how many bears will come to the party today. Why I say bears, is because yesterday the Nifty futures long positions fell below 50% from 54% and the Put-Call ratio in options plunged to 1.20 from 1.63 on what is seen as one of the biggest sell-offs leading to expiry.

Rollovers to July jumped from 37% to 51.20% indicating that more than half of the open positions were rolled over to next series. 10550, 10500 and 10400 calls added more than 10 lakh positions each and we have 10500 and 10400 call having the highest OI on the call side. On the put side there is shedding of OI everywhere and 10000 and 9900 put has the highest OI indicating 9900-10500 expiry range.

What is the Nifty call for the day?

SGX Nifty is suggesting that we are likely to open a gap down of around 80-100 points and open in the 10200-10220 zone. What happens in the morning session before Europe opens at 12.30 PM and expiry factors come into play around 1 PM is important. If till Europe opens Nifty manages to protect the 10150 mark and trades above that and if Europe opens a bit positive, which you will know by 12 noon then you can go for a long position with 50-70 points target on Futures.

If Nifty breaks 10150 then the journey towards 10000 is imminent and even if Europe opens positive also, weak cues will make Nifty volatile and trading might not be possible. So, trade only if Nifty stays above 10150 in the morning hour and if Europe opens positive. Stay away if Europe is negative or if Nifty falls below 10150 or both. Expiry range is 9900-10300 which is very volatile.