Market outlook for tomorrow, 5th May
Nifty fell by almost 226 points from its high today to close at 14496.50 just below 14500. Banknifty on the other hand declined by more than 740 points from its intraday high to close at 32270, well below 32500. So should we be worried? Let us see.
1) FIIs were net sellers in equity by 1772 Crs ( Net sold for 4th day in a row), net sellers in Index futures by 288 Crs (just 5% more than buying figure) but net buyers in stock futures by 1178 Crs (8% more than Selling figure). DIIs were net buyers in Equity by 987 Crs. So if you note, FIIs sold much less than yesterday and DIIs bought much more (almost double) than yesterday and yet Markets fell significantly. Which means FIIs sold Nifty heavy stocks, in other words, booked profits in large caps. So it does not tell me that this is a panic sale. This is also reflected in their purchase of stock futures. Therefore it is not a complete bearish scenario as far as FII & DII data is concerned.
2) Option chain shows more and heavy Call build up than Put build up signifying that sentiment for this expiry is bearish.
3) Both Nifty and Banknifty closed below their 20 DSMA ( mid line of Bollinger band) and 50 DEMA. This also tells us that on charts situation is bearish.
4) Now let us look at Covid situation- Number of fresh (24 hr data) infected people is showing reduction for 3rd day in a row. Number of dead also has reduced but as I wrote yesterday, due to less testing on weekends figures are generally less on Mondays and Tuesdays and they show jump on Wednesday, so tomorrow morning figures will hold the key among other factors. Situation though improved on oxygen front, is still grim regarding beds, ICUs, etc. Courts too are getting active. So that is a big bearish overhang.
5) Global markets – DJIA, NASDAQ both are in red; European markets too are in red and SGX Nifty is trading at 14426 which is 106 points below its previous ( afternoon session) close. So not encouraging news from this side.
6) So given the scenario it is better that one takes short trade. I have marked two selling areas with stop-loss above red lines ( shown as red dotted lines) where one can sell Nifty. However, tomorrow being pre-expiry day, trade with caution and square off before 1:30 pm or so because in later half wild moves do take place.
Disclaimer: I have sold Nifty and Banknifty Call & Put options and bought Banknifty call options for next week expiry.
1) FIIs were net sellers in equity by 1772 Crs ( Net sold for 4th day in a row), net sellers in Index futures by 288 Crs (just 5% more than buying figure) but net buyers in stock futures by 1178 Crs (8% more than Selling figure). DIIs were net buyers in Equity by 987 Crs. So if you note, FIIs sold much less than yesterday and DIIs bought much more (almost double) than yesterday and yet Markets fell significantly. Which means FIIs sold Nifty heavy stocks, in other words, booked profits in large caps. So it does not tell me that this is a panic sale. This is also reflected in their purchase of stock futures. Therefore it is not a complete bearish scenario as far as FII & DII data is concerned.
2) Option chain shows more and heavy Call build up than Put build up signifying that sentiment for this expiry is bearish.
3) Both Nifty and Banknifty closed below their 20 DSMA ( mid line of Bollinger band) and 50 DEMA. This also tells us that on charts situation is bearish.
4) Now let us look at Covid situation- Number of fresh (24 hr data) infected people is showing reduction for 3rd day in a row. Number of dead also has reduced but as I wrote yesterday, due to less testing on weekends figures are generally less on Mondays and Tuesdays and they show jump on Wednesday, so tomorrow morning figures will hold the key among other factors. Situation though improved on oxygen front, is still grim regarding beds, ICUs, etc. Courts too are getting active. So that is a big bearish overhang.
5) Global markets – DJIA, NASDAQ both are in red; European markets too are in red and SGX Nifty is trading at 14426 which is 106 points below its previous ( afternoon session) close. So not encouraging news from this side.
6) So given the scenario it is better that one takes short trade. I have marked two selling areas with stop-loss above red lines ( shown as red dotted lines) where one can sell Nifty. However, tomorrow being pre-expiry day, trade with caution and square off before 1:30 pm or so because in later half wild moves do take place.
Disclaimer: I have sold Nifty and Banknifty Call & Put options and bought Banknifty call options for next week expiry.
Disclaimer
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