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Market Trade Setup 30th May

Finally, expiry day is here and yes its monthly expiry. We are so used to seeing weekly expiries on Nifty and Bank Nifty that monthly expiry doesn’t look like a big event anymore. But monthly expiry does carry its importance and it all depends whether you are able to spot it or not. Globally, things are looking very bad with US-China trade tensions reaching a peak and to add to that, the US bond yields fall to 20 month low. All this means Dow Jones lost around 220 points last night and today morning Asia is also in the deep red. Hong Kong is down 150 points, Japan down 180 points and Shanghai is almost down 1%. The only good news for India is crude which is still at 69.5 dollars.

On the domestic front, we have very positive news which is Modi taking oath for the 2nd time and a stable majority Govt in power for the next 5 years which means stability in policy and decision making. The focus is also on the ministries and Finance is one ministry that will be closely watched by the market.

Market wants Piyush Goyal and the fact that Goyal was with Amit Shah for over an hour last night has set-off speculation that he is in for an important portfolio and that could be Finance. When this was happening Modi travelled to Jaitley’s home and requested him to reconsider his decision and we do not know what the outcome is. So, this is going to be something that the market will keenly watch out for. 

On the derivatives front, today is the expiry and this month has seen Nifty up 220 points so in all probability this series is going to be in the hands of bulls. This has been a volatile series as its an election series, it started at 11600 mark went all the way down to 11,100 mark and on the results day it touched 12,041 mark. That’s almost 1000 points and that makes this perfectly volatile.

The overall long positions in Nifty futures has touched the lowest level of 48% and the Nifty put-call ratio fell from 1.26 to 1.16 levels. 12000 call added 12.9 lakh open interest yesterday and that means 11980-12000 is the cap for today. On the downside 11780 is the first support and 11720 is the firm support, which is because of the 11700 and 11800 puts having high open interests. 

What is the Nifty call for the day?

Today is a very important day with respect to global as well as domestic contexts. Globally things are worrying but India is in a celebratory mode, so which way the market swings we need to see. Today we are likely to open between 11860-11890 levels and that is the first minor support.

If that doesn’t hold and if we see a free fall then 11780 might come as a rescue. On the upside 11980 is a firm resistance and it is very likely that we might gravitate between these levels. My sense is market will be a bit positive going to this important event of oath taking and let’s hope that global factors don’t affect this sentiment. For the trade, you have a position yesterday and exit as soon as it goes into 11950-11980 zone