Analysis and Game Plan - 29 November 2018

  • With respect to nifty, we are at a crucial point. We had a swing high on 17 October at 10710. We broke that on 19 November but couldn't sustain. We are again between 10700-10800 and it is going to be a huge resistance.

  • From 10850 we had a gap down of 10747 which is yet to be filled.

  • At resistance, we can either open gap-up to fill that and fall, go sideways after a flat opening, go up or down after a sideways opening. Anyway, it is going to be crucial.

  • Pain has moved up to 10700 and with one day to expiry, PCR is at 1.92. Any other day I would have taken it as a sign to sell calls, but tomorrow is expiry and people tend to let options expire worthless, and option writing was concentrated at 10650/10700 puts and 10800/10850 calls, I assume we may hover between 10650 and 10850, which in turn means that possibility of gap-up fall and opening flat or down and testing 10800+ is there.

  • Bank Nifty touched a swing high today but couldn't sustain.

  • Pain moved to 26400 while PCR is at 1.30.

  • Whether bullish or bearish can only be concluded once we have witnessed first hour tomorrow.

  • For me bank nifty is in sideways mode now for tomorrow and any further up move can only follow after 26600 is broken and how it is broken. Down trend for a while can come below 26420. So these are the levels I will be watching tomorrow.

  • India Vix came down by 2% today.

  • Till 12th December, we are going to have a lot of political events and statements which will cause wild move in markets, so I wont stay bullish at this point.

  • We have G20 Summit (US China trade war), RBI Parliamentary panel meet, RBI monetary policy review, state elections result till 12th December.

  • Update 07:30 am - After fed chair commentary on rate hikes, Dow jumped by more than 2.5%. Sgx nifty jumped by more than 1%.

Conclusion: Sideways bias.

Game Plan:

  • I am holding all position without any direction bias, so looking for pure time decay.

  • Will exit these positions tomorrow slowly or might let them expire worthless.

  • For expiry trading, I wont be trading for first 1 or two hours. I will remain on calls selling side overall. 26420 is selling point for me followed by selling at any retrace.

  • Update 07:30 am - It is almost certain that we will have a gap up today. How much gap up, cant be said. If speculation is right then 120+ on nifty and 300+ on bank nifty. I will be buying some calls for hedging and selling OTM calls in intraday to hedge and lower the impact.

Rohit Katwal

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