The US did what it does the best, being volatile. After a 600 point rally on Wednesday, it fell 400 points yesterday and almost all those gains are erased. This is the uncertainty we will see till the Presidential elections. At one point Dow was almost down 700 points but it recovered 300 points towards the end.
Yesterday had it not been Reliance and last hour expiry moves, Nifty would have been in negative. Reliance was contributing to all its gains on Nifty till 2.30 and after that, the expiry factors took some banking and tech stocks to go up helping the Nifty. Will Nifty see the same trend today or not is a debatable question. Globally we have an Asia which is largely red, except Hong Kong and Japan which are in mild green up between 50-100 points and Dollar index is also inching up and crossed 93.3 mark, contributing to the fall
On the domestic front, Reliance was the hero which singlehandedly carried Nifty all along the day. The stock has gone up 7% which is quite unusual for a heavyweight stock like Reliance and almost 6.5 crore shares got exchanged in the cash market. Will Reliance continues its dream run and for how long needs to be seen. The other factor which will continue to worry the market is the border tensions with China and yesterday’s 2.5-hour meeting has thrown a 5 point formula, but we need to see whether it will work on the ground or not.
Technically, the 20dma has conquered thanks to Reliance but will it hold today or not is a big question. 11410 is where we have 20dma and it will be observed very carefully. If it is taken out on the downside then we will again go back to 11250 mark and then the 50dma of 11150 and further slide we have 200dma at 10800.
On the derivative front, yesterday was a bullish day for weekly options expiry and yesterday we created a new record in turnover at 45.8 lakh crore. Now, Indian derivative market is within the touching distance of 50 lakh crore and it is achieved it will be another landmark.
On the Futures front, there was a huge short covering as Nifty continued to rally and that took the overall long positions on Nifty futures to 58%. The Options PCR for 17th September expiry starts at 1.42 mark and 12000 and 11500 call start at a similar OI indicating that 11500 could really be a strong resistance and that mark cannot be crossed easily. On the put side, there was an overwhelming addition of 15.1 lakh contracts and 10500 has the highest OI indicating that there are many who believe that the market has the potential to go there. So, this week its more bearish than bullish.
What is the Nifty call for the day?
A long position yesterday would have given you the profits you deserved but today is a different day. We are likely to open a bit down around the 11400-11420 mark and the level to be protected is 11350-11380 range. The entire story depends on how Reliance behaves today. If we see buying in Reliance then 11350-11380 will be protected and that presents you to take a long position with 11420-11450 as the target.
But if Reliance is weak behaves like how Nifty is behaving, then it is better to stay away from today. Today is Friday and over the weekend many things can happen at the borders and its not advisable to carry any long positions into next week. So, take a long position if Reliance is contributing to Nifty, else stay away.