Short Market Report
Extreme geopolitical negativity resulted in a gap down that was not seen before. Owing to that an advance decline ratio of 1:20 (1:5 by EOD) which added to the pain of the investors. Amidst all this negativity, the goo thing was that both indices showed impressive recovery from day low. The recovery was so good in banknifty that it managed to get back into the short term channel which was not the case in case of nifty which tested the recent channel bottom as a reistance.
Banknifty managed to close above our reference level of 37355 but nifty closed below 17100. So, in a way, banknifty is comparatively stronger than nifty. We had expected neutral movement in both indices but the huge gap down meant that indices would end bullish if it has to cover the gap.
I would urge every one to note the movement in indices today which would be a learing experience to understand what usually happens in case of a major gap down. Understanding these dynamics is very important to trade. We would have gone long through option buying if volatility was not so high.
Option data suggests trading range again to be 17000-17500 (nifty) 37000-38000 (banknifty). Shorts have been built up in both indices. PCR data indicating bearishness. One interestin thing that happened in banknifty is that there has been masive short covering in puts. Option seller were in too much panic and they have paid the price.
Russian indices are trading in green but US indices are in red. So how this will impact is uncertain. Since, US markets have more effect on Indian markets, so expecting bearish move.
What to expect tomorrow? Russia-Ukraine issue is controlling markets; not levels. So it is esential to maintain a bearish bais unless the crisis gets over. In case of a huge gap down we can go long as has been explained in market dynamics.
What to trade? We have been maintaining our option selling stance by selling 37000CE and 38500PE. In case of nifty 16800PE and 17800CE. This has been generating consistent profits and is likely to be the range where this expiry happens.
In short term, both indices are bearish as head and shoulder pattern can be seen in charts.
Bias Bearish
Conviction Neutral
Extreme geopolitical negativity resulted in a gap down that was not seen before. Owing to that an advance decline ratio of 1:20 (1:5 by EOD) which added to the pain of the investors. Amidst all this negativity, the goo thing was that both indices showed impressive recovery from day low. The recovery was so good in banknifty that it managed to get back into the short term channel which was not the case in case of nifty which tested the recent channel bottom as a reistance.
Banknifty managed to close above our reference level of 37355 but nifty closed below 17100. So, in a way, banknifty is comparatively stronger than nifty. We had expected neutral movement in both indices but the huge gap down meant that indices would end bullish if it has to cover the gap.
I would urge every one to note the movement in indices today which would be a learing experience to understand what usually happens in case of a major gap down. Understanding these dynamics is very important to trade. We would have gone long through option buying if volatility was not so high.
Option data suggests trading range again to be 17000-17500 (nifty) 37000-38000 (banknifty). Shorts have been built up in both indices. PCR data indicating bearishness. One interestin thing that happened in banknifty is that there has been masive short covering in puts. Option seller were in too much panic and they have paid the price.
Russian indices are trading in green but US indices are in red. So how this will impact is uncertain. Since, US markets have more effect on Indian markets, so expecting bearish move.
What to expect tomorrow? Russia-Ukraine issue is controlling markets; not levels. So it is esential to maintain a bearish bais unless the crisis gets over. In case of a huge gap down we can go long as has been explained in market dynamics.
What to trade? We have been maintaining our option selling stance by selling 37000CE and 38500PE. In case of nifty 16800PE and 17800CE. This has been generating consistent profits and is likely to be the range where this expiry happens.
In short term, both indices are bearish as head and shoulder pattern can be seen in charts.
Bias Bearish
Conviction Neutral