Weekly Market Report 03.04.22

Apr 3, 2022

Nifty and bank nifty had a stupendous one way run which managed to push both indices firmly in green. But is it going to be all green? Let’s analyse

The global scenario has been in a cool off phase till market close on Friday but few hours after that Ukraine was kind enough to bomb a Russian Oil Facility. This was right around the time that our Hobble Finance Minister had confirmed that we had started buying some crude oil from Russia at discounted price and the fact that we would continue to do so was the icing on the cake. US had previously warned about the sanctions that might be imposed on India if we were to do. But we gave a damn and went on to do it. Even though the situation looks a bit grim, most of the effect of war has been factored in to the market already; as believed to be the case by many analysts. I don’t beg to differ from that. Take note that peace talks between two nations are in progress as per news reports and the final talk between the two supremes will take place in Turkey.

US crude has dropped below 100 dollars (UK Side < 106) and this indirectly has a positive effect on Banknifty. It is negative for only one big player (Reliance) which might have a dragging effect on Nifty to some extent.

Taking the data into consideration, it would be tough for Nifty and Banknifty to push beyond 18000 and 38000 this week. If you ask why, the reason would be the conviction of the call writers sitting at 17600 and 37000 who have not yet unwinded their positions. If you ask me why? I don’t know the answer. At the start of the day there were basically not much of positions made in the options except by the option sellers who play in long term options. So the market just took off into one direction and never looked back. None of the day’s high were broken. This one directional movement mainly led option sellers to write the calls at higher prices. Nevertheless, these are dynamic data and if the market shoots up too fast, these positions have to be adjusted which will add more rocket fuel to the indices.

FIIs have become net buyers and have bought almost 5590 cr. This is what everyone has been waiting to see for a long time now. Why is it important? FIIs put in concentrated money in index heavy weights like Reliance and HDFC twins. This pushes the market tin such a way that the whole stock market feels a sense of bullishness driving the other stocks higher as well. 

So what’s the problem? Problem is that we are not sure if this momentum is going to sustain or not. Classifying it as a dead cat bounce or a true one I beyond the capabilities of any analyst.

How to trade?

Nifty Long: Above 17783
Nifty Short: Below 17490

Banknifty Long: Above 37200/37300
Banknifty Short: Above 36800


WEEKLY OUTLOOK
> In between these ranges.. maintain delta neutral strategies like short strangle.
>Bias and Conviction is BULLISH
> Banknifty is likely to expire below 38000 and 37581 might be a stiff resistance
> Nifty is likely to expire below 18000. 17802 might be a stiff resistance
> Strong Sectors are PSE, BANKING, ENERGY
> Weak Sector: AUTO

Apr 4, 2022

Note

Levels worked perfectly on the long side. No short positions