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What a rally we saw yesterday!

Nobody saw it coming, but it came and took everyone by surprise. We know that 10500 is the target for this series and yesterday’s movement was part of that, but nobody expected it to come so soon. For the 3rd month running Nifty is showing strong momentum on the upside and we need to see how far it goes.

On the global front, though Europe closed in slightly negative terrain, Dow gained 150 points and today we had some jitters in the morning when there was a talk of the US-China trade deal being put on halt. But the clarification from white house restored the up move and most of the Asian markets are trading in green with Japan up 180 points and Hong Kong up 250 points. Brent crude is also picking up momentum and trading above 43 dollars now and SGX Nifty, as a result, is up 40 points indicating a positive start for us.

Domestic News

On the domestic front, the biggest talking point now is the 17th consecutive day of fuel price hike and everybody is talking about it now. For example, on 5th June the petrol price in Hyderabad was 73.97 rupees which increased to 82.64 rupees now. That’s an increase of 12% and it will surely have its impact on inflation as it is bound to have a ripple effect on various products as well as transportation and logistics and banks.

Other than that we really don’t have any news that can influence the market and Nifty will move on the global rally and the expiry factor. 10500 seems to be the logical target for Nifty now and 10100 which is the 100dma will be the support on the downside. 10500 is the 61.8% of the retracement from the 7511 levels we reached on 23rd March and this should halt the Nifty rally for the near term. keep an eye on that.

F&O Action

On the derivatives front, as we approach closer to the expiry date the rollovers are going up and from 17% yesterday the Nifty rollovers to July series have gone up to 26.67% and we had seen 67 Cr buying in Nifty futures which kept the overall long positions on Nifty futures constant at 56%.

On the options front, the PCR also remained steady at 1.52 vs 1.56 seen in the morning. 10800 call added 7 lakh positions while 10600 call added 6.2 lakh positions and 10450 call added 4 lakh positions and 10500 call and 11000 call have similar OI of 35.7 lakh and 34.9 lakh contracts. On the put side, 10100 put added 12.3 lakh and 10200 put added 10.2 lakh positions respectively while 10300 put added 9.4 lakh positions and 10000 put has the highest OI on put side followed by 9900 put making 10000-10500 as the range for the expiry.

What is the Nifty call for the day?

Asia is trading in the green after the clarification that came from White house on US-China deal and as a result, we are likely to open around 10330-10350 mark and we might touch the 10400 mark intraday and remember Nifty has the ability to go till 10500 and it might happen today or tomorrow or on expiry day. On the downside 10300 will be the first support.

So, the trade for the day is, if after the first hour Nifty is still trading in green then you need to take a long position with 40-60 points target on Futures and 20-30 points on call options. If by any chance Nifty slips into the red during the first hour then bears will be back and that means risk. So, stay out and watch whether the closing is above 10300 or below that. If we close below 10250 today then we are on our way towards 10100. So, stay away.