A dreadful Monday on cards and first time am feeling how a bear market looks like. It was only during the demonetization time and during surgical strike time we have seen a fall but the fall stopped between 10 to 15% mark. But this one looks much bigger and scarier. On Friday, Dow fell 250 points, but that was history.
Today morning Dow Futures are down 1200 points, Japan and Hong Kong are also down 1200 points each and this is nothing but a falling knife. The US 10 year which was close to 2% a year ago is now at 0.46% indicating a total apathy to any kind of borrowing or investment. Added to this Brent Crude corrected 25% on a single day and from 47 odd dollars it has fallen to 34 dollars. This is due to lack of demand due to Corona plus cracks in the members of OPEC and organization that was created nearly 50 years ago.
Domestically, there is absolutely no good news that we can talk about. Added to global worries and Coronavirus we have the Yes bank mess and the mood could not be uglier on the Holi eve. Tomorrow is a holiday on account of Holi and that might add more panic during the last hour and prevent any kind of recovery.
SGX Nifty is indicating a deep cut of more than 300 points and that means the level of 10700 will be broken at the opening itself. That means we have more than 15% correction from the all-time highs and 200dma which indicates the long term bear market is at 11600 mark which is almost 1000 points away. The only levels that are left to watch now are the pre-tax cut level of 10700 and the 52 week low of 10630. If these two are broken today then it is totally uncharted territory on the downside.
On the derivatives front, Friday saw the Nifty futures premium going into a discount of 50 points from 13 points and that is due to a huge selling of nearly 300 Cr in Nifty futures. The overall long positions which were at 19% on Friday morning fell to 15% by the time we closed the trade. The market is oversold now but not getting support anywhere.
The options market also showed bearishness as calls were sold in the ratio of 2:1 and that has brought the Nifty PCR down to 1.25 from 1.42. For 12th March expiry 11000 call added 8.6 lakh positions and 11100 call added 8.1 lakh positions and though 11500 call has highest OI it is going to be meaningless at least for today. On the put side 10900 put added 7.2 lakh positions and 10500 put added 4.6 lakh positions and 10500 put has highest OI and that might act as a support for any fall.
What is the Nifty call for the day?
Expect a maniac Monday today with Nifty opening below 10700 mark and the 52 week low of 11630 will be at stake. What we need to see is whether Nifty holds on to this 11630-11700 mark or will that be broken during the day. The afternoon session is more important as tomorrow is a holiday and if Europe opens weak then we might break the 10630 mark and go below.
That will mean we are on our way down to 10000 mark and only a strong fundamental can save the market and take it up. Do you really want to trade in this uncertainty? Short positions can be extremely dangerous unless you have a nerve of steel and you simply don’t have the courage to go long. So, the best thing is to keep your money firmly in your pocket.