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After a long weekend we are back to the last week of May, the expiry week and we are just 3 days away from the expiry and as of now it looks like a bear series with Nifty down around 6% and unless there is a big move for next two days this will end as a red series making it 4 red and 1 green series for the year.

Globally, US markets last traded on Friday and so, the cues from there have no relevance today but today we have woken up to positive cues on the back of the news that one more Corona vaccine going for the human trial in July. This has kept the Asian markets in the green zone, at least for now. Hong Kong is up 400 points and Japan up nearly 500 points and that means SGX is also up nearly 70 points. Brent crude is also trading higher at 36 dollars on the news of economies opening up across the world and demand for crude going up.

Domestic Cues

A lot happened over the weekend. India has been reporting 7000 plus virus cases in the last 2 days and yesterday, the number took a slight dip to 6500. Mumbai seems to be the worst hit with over 30,000 cases accounting for 22% of the total virus cases in India. This cautioned the Govt and the Airline opening that was to happen full-fledged yesterday was only partial and guarded.

Uncertainty as to how a virus spreads once, trains and Airlines open up is still unclear and the market will worry about it. Technically the 20dma is now placed at 9220 mark and the 50dma is at 9050 mark and this could be the range for Nifty for the expiry. Unless this range is broken upward or downward movement is not possible. Today we will have an opening in the middle of this range so we need to observe very carefully how Nifty moves from there.

Derivatives Cues

There is selling happening in Futures on Friday also and the Nifty futures long positions have come down to 39% from 44% and Nifty rollovers for the June series as of now stand at 26.2%. On the options front, the Nifty PCR remained almost constant at 1.28 vs 1.29 at the beginning of the day on the back of equal demand for calls and puts. 9000 call added 4.5 lakh positions while 9600 call added 4.2 lakh positions and 10000 call still has the highest OI followed by 9500 call and then 9300 and 9000 call.

The roof thus extends from 9000 to 10000 mark depending on how Nifty behaves. On put side 8800 put added 6 lakh positions, 8600 put added 5.5 lakh positions and 8200 put added 2.5 lakh positions and 9000 put still has the highest OI followed by 8500 put and 8000 put indicating strong support at 9000 and then at 8800.

What is the Nifty call for the day?

Yesterday SGX added 40 points and today another 60 points and that means we will have a gap up opening of nearly 100 points to the Friday’s closing of 9040 which means we will open around 9120-9150 mark and we have the 20dma placed at 9220. On the downside 9050 which is 50dma can be strong support.

So, the trade for the day is if Nifty opens around 9120-9150 and holds 9100 for the first hour then you can go ‘long’ with a 50-60 point target and you can exit your positions in 9200-9220 range. If by any chance there is selling after the gap up and Nifty breaks 9100 and goes to 9050 then it is better to stay away till it is clear that Nifty holds 9050 mark. Then you can go long here. This is a slightly complex trade and you need to take it carefully depending where Nifty settles down. If 9050 is broken, then stay away from the market