The strong sentiment with which we started the trade yesterday morning has disappeared by afternoon and we closed with all those fears are coming back. This shows how much volatile the news is also. There was a positive feeling yesterday morning that the economy is on the verge of starting off again and that has kept the markets all over the world positive.
But overnight things changed globally also and now there are fears of 2nd wave of infections triggering off in Asian countries like South Korea and Japan and that has started to affect the market. Dow Jones on these fears has closed more than 100 points lower but Asia is more worried and as a result, Hong Kong is down more than 300 points and Japan lost another 100 points. Brent crude is stagnant at 29 dollar mark and seems to be stabilizing there.
On the Domestic Front
The worries are too many for us compared to any part of the world. Yesterday PM had a meeting with different state CMs and it seems 8 CMs including Punjab, Bengal and Telangana wanting to extend the lockdown while Maharashtra and Delhi, despite having many cases are requesting for a gradual opening up of the economy.
Yesterday we crossed 4000 cases a single day and today also we would be around 3500 and it is a challenge between opening up of the economy and sustaining human lives. This uncertainty will affect Nifty. Now, if the series low of 9166 is broken then we can go all the way down to 8700 mark now. If Nifty is able to hold 9166 and take support there then 9350 and subsequently 9500 will be the mark where Nifty can head in this series. In that context today becomes very crucial for Nifty.
On the Derivatives Front
There was an equal amount of buying and selling seen in both Futures and Options, which makes yesterday markets couldn’t decide which way it wants to go. India Vix is still at a higher 38% and if it crosses 40 mark then wild swings will start all over again.
On the options front, the Nifty put call ratio went down a bit to 1.25 from 1.32 while the overall long positions in Nifty futures remained more or less constant. 9600 call added 5.6 lakh positions, 9800 call added 4.9 lakh positions and 9500 call has the highest OI on the call ade followed by 9400 call. On put side 9200 put added 3.4 lakh positions and 9000 put added 3.3 lakh positions and 9000 put followed by 9200 have the highest OI on put side indicating a 9000-9500 expiry range for 14th May expiry. However, things could change today.
What is the Nifty call for the day?
A weaker Asia means, after two days of gap up opening we are going to open gap down today and we will be opening around 9180-9200 zone and then we have the 9116 which is the series low that will come into the play directly. So, the trade for the day is, go short the moment Nifty opens around the 9200 mark and keep 9120 as the target. 9100-9120 is a support zone and Nifty will try to protect it.
Once the target is achieved you can exit and stay out for the rest of the day. If this trade is not possible, then wait for Nifty to stabilize and if it is not going above 9200-9220 mark till afternoon then you can try a short trade there with 9120 as the target. But this is not a market to go long unless there is a stimulus package coming from Govt or any positive news coming from Europe or the US.