Market Trade Setup 28th December

Markets welcome 2019 3 days ahead with the start of the January series. 2019 for me is the year of the decade as well as the entry point to next decade. The year has so many cues to look forward to and the most important being the General Elections scheduled in April and May that could define the country’s progress into the 3rd decade of the 21st century. On the global scenario, Dow Jones has shown a 900 point volatility were it fell 600 points and then rose above to close 250 points higher than the previous day. There is so much confusion about US entering into bear territory in 2019 and the market is just not able to decide where it goes.

The China factor is weighing heavily in everyone’s mind and Asian markets are also like US markets, very volatile. Japan is down nearly 200 points while Hong Kong is up just 20 points. That’s a very uncertain January start globally.

On domestics, this 2019 is crucial for us much more than any country in the world as we go for a general election. 2018 was a year that went to bears 7-5 as Nifty remaining in a flat zone. The year started with Nifty at 10500 levels and now we are at 10800 level which means in the entire year we just moved 300 points which is just 2.5%. However, in 2018 we have seen a high of 11760 and a low of 9951 and right now we are almost in the middle.

On the macro news, the Fiscal deficit of 115% for April to November period is a big negative that will hit the market, especially bond markets. Now it is clear that Govt is not going to stick to its fiscal deficit targets and that is something we will have to negotiate today. 

What to expect from the January series?

If we look at the last 5 January series we have 3 January series that went positive and 2 January series that went negative. 2014 and 2016 January series were negative and 2015, 2017 and 2018 series were positive. The last two January series have seen a 500 point jump on Nifty. So, what does this January holds needs is to be seen. The rollovers from December to January were at 74% which is highest in the last 2 months and higher than the average levels also. The Nifty put-call ratio is also at 1.54 which is looking very bullish versus 1.39 that we ended the December series with. 10500 on the put side and 11000 on the call side are the markers seen. But we also need to watch out for 10800 put and 11200 call as there could be some open interest that can be built if Nifty goes up. 

What is the Nifty call for the day?

There will be a positive opening for the market where Nifty will open around 10830-10850 levels and being the first day of the series it is always going to be positive. On the upside 10920 is the resistance and 10820 is the support. So, I suggest taking a long position anywhere between 10830-10850 levels with 40-50 points as the target looking at the possible resistance zone of 10900-10920 levels.