Reports coming in from various states regarding covid-19 suggests that situation is as grim as it was earlier. Lockdown in Maharashtra is actually not strict lockdown since public and private transport is allowed, essential services ( groceries, vegetables, Milk, banks, NBFCs, Cooperative credit societies, SEBI and market related offices ( meaning brokers, etc.), RBI, pharmaceuticals, home delivery from kitchens/restaurants are all allowed. So let’s examine what other data tells us:
1) On Tuesday, FIIs were net sellers in Equity by 731 Crs and DIIs were net buyers by 244 Crs. So how did market jump- meaning, what caused 194 point jump in Nifty and 980 point jump in Banknifty? The devil is in the detail as they say. FIIs bought heavily in index futures (1995 Crs – 35% more than Sell figures) and stock futures (1304 Crs-9.91% more than Sell figures). This buying caused both indices to rise. So what does it mean. To my mind, it says that FIIs thought that both indices were in oversold region and there is some room for rise in both indices in near future (hence huge buying in index futures). This also consequently means that Market is not likely to a see big fall on Thursday. If at all there is fall, it will be muted and not without some rise above yesterday’s highs.
2) Nifty Option chain- On PUT side, highest OI is at 14000 but highest Put writing (16526 lots) is seen at 14400 which has good OI build up (28,013 lots). Also notable is fact that there is unwinding above 14650 on almost all strikes suggesting that Put writers are not expecting Nifty to close above 14700 ( since very less unwinding is seen on 14650- only 224 lots). On CALL side, Highest total OI is of course at 15000 but there is no fresh good Call writing at any strike. Highest Call writing of only 6942 lots, is seen at 14650. Also, interesting to note that there is good unwinding on lot of strikes from 14200 to 14950 barring only 3 or 4 strikes. This is really revealing because what it tells me is that Call writers are not confident on any strike acting as resistance which also means that market can rise sizeably. So to conclude from option chain analysis I see Nifty rising has more probability and range is above 14400 to even 14950. Let’s confirm this on charts.
3) On daily chart, Nifty finished with Lower high (LH), higher low (HL) and higher close (HC) than yesterday. Banknifty finished handsomely with HH, HL and HC. Both charts are giving good buying areas, so buy if these indices fall to given levels:
Nifty buying area is between 14290 and 14331 with SL below 14275
Banknifty Buying area is between 31025 and 31175 with SL below 31050.
Nifty has 2 resistances- R1 at Monday’s high of 14652 and R2 at 14760. 14652 seems scalable but Nifty will fall from R2 so one can short there.
Banknifty has only one resistance coinciding with Friday’s low at around 32330 so Sell there if banknifty reaches this level.
1) On Tuesday, FIIs were net sellers in Equity by 731 Crs and DIIs were net buyers by 244 Crs. So how did market jump- meaning, what caused 194 point jump in Nifty and 980 point jump in Banknifty? The devil is in the detail as they say. FIIs bought heavily in index futures (1995 Crs – 35% more than Sell figures) and stock futures (1304 Crs-9.91% more than Sell figures). This buying caused both indices to rise. So what does it mean. To my mind, it says that FIIs thought that both indices were in oversold region and there is some room for rise in both indices in near future (hence huge buying in index futures). This also consequently means that Market is not likely to a see big fall on Thursday. If at all there is fall, it will be muted and not without some rise above yesterday’s highs.
2) Nifty Option chain- On PUT side, highest OI is at 14000 but highest Put writing (16526 lots) is seen at 14400 which has good OI build up (28,013 lots). Also notable is fact that there is unwinding above 14650 on almost all strikes suggesting that Put writers are not expecting Nifty to close above 14700 ( since very less unwinding is seen on 14650- only 224 lots). On CALL side, Highest total OI is of course at 15000 but there is no fresh good Call writing at any strike. Highest Call writing of only 6942 lots, is seen at 14650. Also, interesting to note that there is good unwinding on lot of strikes from 14200 to 14950 barring only 3 or 4 strikes. This is really revealing because what it tells me is that Call writers are not confident on any strike acting as resistance which also means that market can rise sizeably. So to conclude from option chain analysis I see Nifty rising has more probability and range is above 14400 to even 14950. Let’s confirm this on charts.
3) On daily chart, Nifty finished with Lower high (LH), higher low (HL) and higher close (HC) than yesterday. Banknifty finished handsomely with HH, HL and HC. Both charts are giving good buying areas, so buy if these indices fall to given levels:
Nifty buying area is between 14290 and 14331 with SL below 14275
Banknifty Buying area is between 31025 and 31175 with SL below 31050.
Nifty has 2 resistances- R1 at Monday’s high of 14652 and R2 at 14760. 14652 seems scalable but Nifty will fall from R2 so one can short there.
Banknifty has only one resistance coinciding with Friday’s low at around 32330 so Sell there if banknifty reaches this level.