Did the fall in NIfty stop today or will it continue further? Let's investigate:
I will investigate from three data points that I refer to usually- DII & FII BUY/SELL figures, Option Chain analysis and Technicals on Chart.
1) As per NSE provisional data, FIIs net SALE figures were at 674 Crs and DIIs net BUY figures were 711 Crs. The final data reveals a telling picture though- FIIs made a net SALE of 328 Crs in Equity, 2902 Crs in Index futures and 897.5 Crs in stock futures. The FIIs sold heavily in all segments! I at least haven't seen such big sale figures in past few weeks.
2) Expiry 11th July; HIghest total OI on CALL side is at 11700 of 28.96 lakhs contracts. Interestingly though today there was call inwinding on this strike (-3.90 lakhs). But then, Call unwinding is seen in all higher strikes from 11800 till 12500. And good fresh call writing is seen in lower strikes from 11650 to 11500 (and below that too). It clearly implies that call writers are getting confident that Nifty is slowly moving toward lower levels and they are taking positions at lower strikes. On Put side, highest total OI is at 11500 of 17.26 lakhs (much less than 28.96 laks). There is PUT unwinding on all strikes on and above 11600. But there is good PUT writing on 11400 (5.27 laks), 11450 (5.87 laks) and 11500 (4.96 laks). Note that highest fresh PUT writing was at 11450 strike. This implies that even PUT writers think that Nifty may go below 11450 too.
3) Now chart- Nifty is taking support from two levels- 100 DEMA (11531) and 61.8% fibonacci (11487). It is supported by Banknifty which is at 50 DEMA and 38.2 fibonacci levels. And that has resulted in the stopover which we saw today. But whenever I have seen such pattern viz., 2or 3 big red candles followed by a doji candle, all having lower highs and lower lows than previous candle, the next candle mostly is again a RED candle. Also, if you see MACD histogram, it has sharp bearish crossover on graph and heavy intensity red bar on histogram which again shows a very bearish sentiment.
All the three studies show that NIFTY might head lower. However since it is sitting at crucial supports, it might not happen quickly. Fundamentally too, problems caused by tax provisions in budget to FIIs, FPIs and HNIs are not going away as per finance ministry notification today. So they will atleast wait for Q1 results before starting to take positions. Till then it looks sell-all.
As for levels, I couldn't find any on NIFTY charts, but if it opens gap down with open-price below today's low, just go short with SL just above day's high.
Happy trading, All the best.
DISCLAIMER: I AM HOLDING PUT OPTIONS IN NIFTY.
I will investigate from three data points that I refer to usually- DII & FII BUY/SELL figures, Option Chain analysis and Technicals on Chart.
1) As per NSE provisional data, FIIs net SALE figures were at 674 Crs and DIIs net BUY figures were 711 Crs. The final data reveals a telling picture though- FIIs made a net SALE of 328 Crs in Equity, 2902 Crs in Index futures and 897.5 Crs in stock futures. The FIIs sold heavily in all segments! I at least haven't seen such big sale figures in past few weeks.
2) Expiry 11th July; HIghest total OI on CALL side is at 11700 of 28.96 lakhs contracts. Interestingly though today there was call inwinding on this strike (-3.90 lakhs). But then, Call unwinding is seen in all higher strikes from 11800 till 12500. And good fresh call writing is seen in lower strikes from 11650 to 11500 (and below that too). It clearly implies that call writers are getting confident that Nifty is slowly moving toward lower levels and they are taking positions at lower strikes. On Put side, highest total OI is at 11500 of 17.26 lakhs (much less than 28.96 laks). There is PUT unwinding on all strikes on and above 11600. But there is good PUT writing on 11400 (5.27 laks), 11450 (5.87 laks) and 11500 (4.96 laks). Note that highest fresh PUT writing was at 11450 strike. This implies that even PUT writers think that Nifty may go below 11450 too.
3) Now chart- Nifty is taking support from two levels- 100 DEMA (11531) and 61.8% fibonacci (11487). It is supported by Banknifty which is at 50 DEMA and 38.2 fibonacci levels. And that has resulted in the stopover which we saw today. But whenever I have seen such pattern viz., 2or 3 big red candles followed by a doji candle, all having lower highs and lower lows than previous candle, the next candle mostly is again a RED candle. Also, if you see MACD histogram, it has sharp bearish crossover on graph and heavy intensity red bar on histogram which again shows a very bearish sentiment.
All the three studies show that NIFTY might head lower. However since it is sitting at crucial supports, it might not happen quickly. Fundamentally too, problems caused by tax provisions in budget to FIIs, FPIs and HNIs are not going away as per finance ministry notification today. So they will atleast wait for Q1 results before starting to take positions. Till then it looks sell-all.
As for levels, I couldn't find any on NIFTY charts, but if it opens gap down with open-price below today's low, just go short with SL just above day's high.
Happy trading, All the best.
DISCLAIMER: I AM HOLDING PUT OPTIONS IN NIFTY.