Donald Trump does it again. He is famous for his one-liners on twitter as well as outside and another one-liner from Trump has punctured the rally in the global markets. Already we were down yesterday and were just clinging to that 12000 mark and with Trump saying that he might delay the US-China trade deal to as late as post-November 2020 elections, there was a disappointment all over. This comes after stiff trade tariffs he imposed on Brazil and Argentina.
There was selling across the big stocks like Apple, Caterpillar etc and Dow Jones closed nearly 300 points down and those bad vibes have caught up for Asian markets too. Hong Kong and Japan are down more than 250 points and all the other Asian markets are trading in red. Brent Crude is still at 61 dollar mark trading at 61.3 dollars.
On the domestic front, there is no news that can move the markets in either direction except the RBI MPC meeting that is due to end tomorrow and there might be a rate cut coming tomorrow. Added to that is the news of S&P keeping the India rating stable at BBB-. This is the rating that India has been enjoying for years and its a good news that S&P kept the rating stable despite the macroeconomic slowdown that India is facing currently.
Technically, yesterday the last tick was at 11998.15 while Nifty averaged out to 11994 mark, which means we were unable to hold 12000 mark. The 20dma comes at 11974 and it is important for Nifty to hold that for the uptrend to continue. On the upside 12158 which is the all-time high will continue to act as resistance so for near term 11970-12150 could be the range we would be looking at.
On the derivatives front, yesterday was another day of selling in futures market and that brought the overall long positions in Nifty futures to 50% from 51%. Now we have longs and shorts in 50-50 ratio which is good in a way. On the options front also the Nifty put call ratio corrected to a more healthy level of 1.30 from 1.44 and this was mainly due to shorting of calls and buying of puts, indicating a very bearish trend.
On the call side, 12000 call added 11 lakh positions yesterday while 12050 and 12100 calls added 5.2 lakh and 3.5 lakh positions respectively. 12100 call still continues to have the highest OI on the call side. On the put side, there was the unwinding of OI everywhere except at 11950 put which added 4.3 lakh positions indicating that 11930 is strong support if Nifty falls. 12000 put continues to have highest OI on the put side.
What is the Nifty call for the day?
Last two days trading was very difficult as Nifty movement was narrow and unpredictable. Making money is becoming tougher and tougher as Nifty breaks down at open and continues to remain flat. Today is going to be a red start in line with other Asian markets. We are likely to open around the 20dma mark at 11960-11980 zone and recovering quickly and going above the 20dma of 11974 is the best thing that can happen.
If that does not happen then the next support will come at 11900-11930 mark and there I suggest you to take a long position, not for the day but for the week as a target. You might carry this long positions to tomorrow and see if 12000-12050 can be achieved. I see no reason why Nifty should go below 11900 mark and even if that happens also, the best strategy would be going for long positions only.