NIFTY for 18th September

NSE:NIFTY   Nifty 50 Index
Last night after I finished writing here, I remembered index movement after demonetisation night (8th November 2016). On 9th morning, Nifty opened almost 500 points down but recovered intraday massively and closed very near to previous close. However, as the knowledge and crisis started to sink in Nifty kept falling for next 6-7 days surpassing low made on 9th also. Now this I remembered because after drone attack on ARAMCO (on saturday), we hardly reacted negatively on Monday. As compared to Friday's close, Nifty made a lower high but higher low suggesting not much low level is being seen. But lack of substantial PUT writing on any strike was pointing towards nervousness and I just thought is it that we are yet to understand the gravity of crisis because if oil remains above $ 67 even for 2 weeks, our import bill takes massive hit. Compound that with dollar fall which together might create extra 12-15% (10-12% crude increase & 2-4% USD increase approximately) foreign exchange outflow. I think this is what exactly happenned today. Brent crude is above $69 and Rupee is at 71.785 (up by 17 paise). But not in my wildest dreams I thought fall would continue to this extent.
FIIs today were net sellers by 808 Crs and DIIs were net buyers by 86 crs . So, FIIs didn't sell much but DIIs bought less because even they do not know how long oil prices remain above $60 (price before drone attack). Govt . is saying supply will not be disrupted. Agreed, there won't be any problem on that front but what is the price that nation needs need to pay for that? Some oil industry professional should shed light on how long are agreements and price guarantees in this field.
Option chain data shows that 10900 has become a strong resistance with highest Call writing and 3rd highest total OI. On PUT side, 10800 has good OI build up but less Put writing. So 10800 is weak support and 10900 is strong resistance. Since today it was one-way fall, some retracement might happen tomorrow. So again its a sell on rise situation. A Selling area is marked on chart.
All the best. Happy trading.
thanks for your analysis
Very informative analysis on crude oil price impact on fiscal deficit. I took position near 10900 today and SL triggered. Never thought fall would be so severe.
@Goutam17, Me too boss! I took longs at around 27500 in BNF... Had to exit with loss!
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