In my last post on Wednesday I had listed three anomalies and said that since things didn’t match we might see a mighty fall. On Thursday and Friday we saw that fall and now if you see all the anomalies have been corrected- Markets (Nifty and Banknifty) fell since covid cases and resulting deaths are rising everyday, forcing stricter measures, like lockdowns by states. Banknifty and Nifty futures are now trading at good premium as compared to its spot prices [Nifty spot= 14,631.10 ; Nifty futures (May) = 14,660 ; Niftybank spot = 32,781.80 Banknifty futures (May)= 32,824 ]. FIIs (net) sold on Friday worth 3,465 Crs (highest in April) and DIIs bought (net) worth ,1419 Crs and as normally would have happened Nifty fell by 263 points. From Thursday’s high the Nifty has fallen by more than 400 points in 2 days. Now what is expected on Monday 3rd May? Reliance, which announced stellar results is expected to rule markets on Monday. Even though Covid cases are rising along with number of dead, the situation regarding availability of hospital beds, oxygen, medicines has improved in various states. Maharashtra, though still reporting highest number of patients seems to have plateaued with numbers between 60,000 to 65,000 since last 2 weeks. Mumbai, the commercial capital of the country is continuously showing reducing figures over last three weeks. So it now seems that with 400 points’ fall in Nifty and more than 1400 points’ fall (from Thursday’s high) in Banknifty these developments have priced in. Let us look at Nifty option chain. On 14800 strike, on PUT side, we see fresh writing of 3,174 lots and total OI at 14055 lots. On higher strikes, although, there is unwinding. On lower strikes, highest total OI is at 14000 strike which is quite far, but near LTP, on 14500 we see total OI of 24,691 lots and fresh Put writing of 3,098 lots. On 14600 strike, there is fresh put writing of 6,238 lots. On CALL side, highest total OI and highest Call writing is obviously at 15000 but neat LTP also we see good Call build-up on 14800 strike ( total OI = 25,499 lots and Call writing = 19307 lots). So it seems, Nifty is likely to trade between 14600 & 14800 tomorrow as per option chain analysis. On Charts, we see that both Nifty and banknifty has taken support at 20 DEMA and 20 DSMA which is also mid line of Bollinger band. So overall picture tells us that market is not likely to fall due to covid fears and might stagnate here or rise due to Reliance results since it has maximum weightage in Nifty. Unfortunately there are no clear cut buy or sell levels in both the indices so trades will have to be taken in live market depending on moves.
What about election results? 14000 this week or till next monday my targets.... watch on !!
protrader1969
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@npritish, These were state elections so they would not affect our makets much.
Anoopkumar1963
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Nice analysis.
ckirtane
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is it not a good idea to sell 14600 ce at 180 & 14600pe at 160(safe from 14260 to 14940 level) ? if nifty is likely to remain side way this week?
Anoopkumar1963
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@ckirtane, It may look okay but u need have a look on volatality.
protrader1969
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@Anoopkumar1963, indiavix is likely remain between 21 &23 so premiums more or less will be in line with that data
protrader1969
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@ckirtane, The analysis that I did is valid for tomorrow only i.e. for 3rd May. For week it will be prudent to sell 15000 CE and 14500 PE and still have some funds to manage trades if Nifty crosses any of the limits.
Poison_1907
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Also, not sure if 400 points fall can represent the loss to economy due to another 15 day to 30 day lockdown.
Poison_1907
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Except Reliance most other Nifty heavyweights are showing weak technical picture and that must also be taken into account.
protrader1969
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@Poison_1907, Agreed. But in present circumstances markets are not ruled by technicals but fundamental and covid-related factors. That's my understanding.