After a red day yesterday, today is the day to talk about the green on the screen. Yesterday, we fell but not to an extent that was expected. That was one reason I told you not to take short positions. You might not make a lot of money on the short side. 11220 level was tested and Nifty closed around 11280 mark.
Globally also things rebound yesterday with NASDAQ recovering some losses that it made this week and Dow Jones gained more than 400 points. But, caution is always advised as this kind of Volatility can only take the markets down. The recovery is attributed to the dollar index which after going to 93.7 corrected to 93.3 now. Asian markets are in the green with Japan up 120 points and Hong Kong is flat up 50 points. Brent crude has also regained the 40 dollar mark at 40.4 dollars and SGX is flat up 5 points as I write this.
On the domestic front, two important events might drive the markets today. The first one is the scheduled talks between the External Affairs Minister S. Jayashankar and his Chinese counterpart. The second news that can have some impact on banking stocks especially is the Supreme Court hearing scheduled today on the waiver of interest on interest for the moratorium loans that were rescheduled during the early part of this year. The sum amounts to 15,000 to 20,000 Cr which is very crucial for banks.
On the technical front, Nifty is now firmly in the range of 11140-11400 which is the 50 and 20 dma for Nifty and unless there is a fundamental factor, breaking this is not possible. That fundamental could be either dollar index or fall in US or the Chinese border tension. So, keep an eye on all these factors while trading.
On the derivatives front, today is the weekly options expiry for Nifty and Bank Nifty and expect a lot of action here. But before that a word on futures, yesterday we saw some unwinding in long positions and opening on short positions and the overall long positions fell from 58% to 55% as a result.
Now coming back to options, yesterday was a bearish day there with more puts being bought and more calls sold. 5 puts were bought for every 4 calls and 6 puts were written for 1 call and that took the Nifty PCR to 1.19 from 1.23. For today’s expiry 11400 call is adding a lot of weight and it along with 11500 has the highest OI on the call side. On the put side, 11200 put is adding a lot of OI along with 11100 put and 11200 put has the highest OI on put side indicating a 11200-11400 range for expiry with an outside chance of Nifty going to 11100.
What is the Nifty call for the day?
Today also we can have a flattish start around the 11260-11290 mark and like yesterday 11200-11220 mark might support that can come if there is a fall. On the upside 11350-11380 is strong resistance and for today a long trade is a workable thing to do.
If Nifty finds support at 11220 then you can think of going long there in 11200-11270 range with 11320-11350 as the possible target or 50-70 point profit range. This is not a market to go short and if you short it, you might get trapped as it is also an expiry day. Keep an eye on the dollar index and news on China and it can have an impact on the market during the day.