The Second Tranche of the 20 lakh crore package has come yesterday. The only measure we had to measure is the performance of SGX Nifty. As it came post market hours. Nifty lost 200 points post the announcements. It went below 9,000 to 8,950. Then it staged a recovery due to the better than expected open on US markets and somehow managed to hold on to the level of 9,150 where we closed yesterday.
The US had a recovery of 300 plus points, even though the jobless claims crossed 3 million. This gain is purely technical after 2 days of loss amounting to nearly 900 points. Quite rightly, Asian markets did not hold to that today and entire Asia is trading in a flat to the negative zone. Both Hong Kong and Japan down 50 points each. Brent crude rose overnight on rumours of pick up in supply and trading at 31 dollars.
Nirmala Sitharaman’s 2nd tranche of 20 lakh crore package was the news. Yesterday the focus was on marginalized segments like migrant workers, street vendors and urban economically backward communities. The highlights are the free ration given to urban migrants for 2 months irrespective of their ration card status. Increase in the wages for those registered under the MNREGA scheme. Finally, 5000 Cr worth loans allocated to the street vendors to restart their businesses.
We need to see how the market will react to all this. Technically, yesterday Nifty found support at 9,120 and closed around 9,120. Today this 9100-9120 level will be challenged in the morning hour itself and if Nifty fails to hold onto this, 9000 will be taken out easily and 8800 is the next target. On upside 9350 is resistance.
Yesterday was the Nifty weekly options expiry but more action was seen in the Futures market. There was a lot of selling in Nifty futures and heavyweight stocks in cash markets and that brought the Nifty overall long positions to just 31%. At the start of the series, there were 64% long.
The Nifty put-call ratio for the 21st May series starts at 1.19 levels vs 1.39 with which we started the 14th May series. For the 21st expiry 9500 call added 8.5 lakh positions while 9400 call added 7.3 lakh positions while 9200 call and 10000 call added 7 lakh positions. For this expiry also 10000 call has the maximum OI followed by 9500 call. On put side 8500 put added 5 lakh positions while 8800 put added 4.5 lakh positions and 9000 put followed by 8500 has the highest OI indicating a 9000-10000 broad range which can also shift to 8500-9500.
What is the Nifty call for the day?
SGX Nifty is also trading in a flat zone very much like other Asian markets, so we might open around 9140-9170 zones unless we read FMs announcements differently. It is tough to read the sentiment from SGX point of view so predicting the open might also be tough. But one thing is clear, if after open Nifty defends the 9100-9120 mark in the first hour and Nifty trades above that then you can go for a long position with 50-60 point target.
Understand that 9250 is resistance immediately, which if take out we can go to 9350. On the downside, if 9100 is not protected and Nifty falls below that then 9000 mark can be held for the day. So, in that case, if Nifty stays below 9100 mark till 11 am then you can take a short position for a 40-60 point target and exit in 9000-9030 zone. Either way, trade safely and cautiously.