Let me try to explain today's developments in the market as per my limited ability. In the morning, three things weighed on traders' minds:
1) Fed cut the rate by only (and expected) 0.25% and commentary was that there were less possibilities of further rate cut this year. This sent world markets spiraling down. Hang-Seng & SGX Nifty too went down and expectedly we too opened big gap-down.
2) Rupee opened lower in the range of 69.10 and perhaps due to subsequent buying later by central bank, did rise to less than 69 later in the day.
3) Bad monthly vehicle sales data.
All the three developments were negative. Now with this at the beginning in the morning, where would you expect markets to go? Another check of my customary FII & DII Buy/ Sale data- Provisional figures show FIIs/FPIs were net Sellers by 1056.55 Crs and DIIs were Net Buyers by 561.28 Crs (Too less, right?). Final figures show FIIs were NET SELLERS in Equity by 1376 Crs (big number) and in Index futures by1145 Crs (again, big number), but Net BUYERS in Stock futures by 687 Crs. So FIIs did sell a lot. Normally, DIIs do come to rescue. But when you have such negative news in the morning when does a buyer buy, if at all he wants to buy ? At lowest price, right? So that happenned at around 2:50 pm when markets were at low and a bout of buying took Nifty from 10881 to 11004 in 25 minutes. My guess is, that's when DIIs stepped in. Till then they were just waiting.
So now, what do we have tomorrow? On charts, Nifty and Banknifty have RSI at 25.18 and 26.96 respectively, both are in oversold area but both made a red candle with lower high and lower low. So as of now we are where we were 2 days back- Back to selling on rise!
Option chain data, though less populated clearly show heavy buid up of OI on Call side and less on PUT side. There is OK PUT writing (7.62 lakhs) and good total OI (15.61 lakhs) at 11000 strike. Fresh Call writing on strikes of 11000, 11100 & 11200 each is above 10 lakhs and total OI at these strikes too is impressive, highest (19.48 lakhs) being at 11200. So what I wrote yesterday and day before, that, now we must pause- stands NEGATED. FIIs and other negative triggers point to south. So I reiterate, back to selling on rise. However, on chart for tomorrow, I have marked a buying area because it looks good. So if Nifty approaches that area one can buy, but use small quantity and please put stop loss since we will be trading against the sentiment. Otherwise, Shorting levels are indicated on chart.
All the best, happy trading.
1) Fed cut the rate by only (and expected) 0.25% and commentary was that there were less possibilities of further rate cut this year. This sent world markets spiraling down. Hang-Seng & SGX Nifty too went down and expectedly we too opened big gap-down.
2) Rupee opened lower in the range of 69.10 and perhaps due to subsequent buying later by central bank, did rise to less than 69 later in the day.
3) Bad monthly vehicle sales data.
All the three developments were negative. Now with this at the beginning in the morning, where would you expect markets to go? Another check of my customary FII & DII Buy/ Sale data- Provisional figures show FIIs/FPIs were net Sellers by 1056.55 Crs and DIIs were Net Buyers by 561.28 Crs (Too less, right?). Final figures show FIIs were NET SELLERS in Equity by 1376 Crs (big number) and in Index futures by1145 Crs (again, big number), but Net BUYERS in Stock futures by 687 Crs. So FIIs did sell a lot. Normally, DIIs do come to rescue. But when you have such negative news in the morning when does a buyer buy, if at all he wants to buy ? At lowest price, right? So that happenned at around 2:50 pm when markets were at low and a bout of buying took Nifty from 10881 to 11004 in 25 minutes. My guess is, that's when DIIs stepped in. Till then they were just waiting.
So now, what do we have tomorrow? On charts, Nifty and Banknifty have RSI at 25.18 and 26.96 respectively, both are in oversold area but both made a red candle with lower high and lower low. So as of now we are where we were 2 days back- Back to selling on rise!
Option chain data, though less populated clearly show heavy buid up of OI on Call side and less on PUT side. There is OK PUT writing (7.62 lakhs) and good total OI (15.61 lakhs) at 11000 strike. Fresh Call writing on strikes of 11000, 11100 & 11200 each is above 10 lakhs and total OI at these strikes too is impressive, highest (19.48 lakhs) being at 11200. So what I wrote yesterday and day before, that, now we must pause- stands NEGATED. FIIs and other negative triggers point to south. So I reiterate, back to selling on rise. However, on chart for tomorrow, I have marked a buying area because it looks good. So if Nifty approaches that area one can buy, but use small quantity and please put stop loss since we will be trading against the sentiment. Otherwise, Shorting levels are indicated on chart.
All the best, happy trading.