Analysis and Game Plan - 31 November 2018

  • Nifty witnessed long unwinding today. Price went down but fresh OI was not added.

  • PCR is still bullish at 1.41.

  • Max Pain is at 10400.

  • Call writing was witnessed at 10300 while put writing was witnessed at 10200 and 10000.

  • 10400 needs to be broken on closing basis for any upmove to sustain. Nifty needs to consolidate before moving up. Vix will also take time to cool down, so any upmove will not sustain for long.

  • Any sustained upmove ignoring consolidation and vix cooling is abnormal.

  • We are bearish on daily and 2 hourly charts. On 30 minutes chart we have entered a steps consolidation phase wherein we may touch 10400 and fall for a proper consolidation.

  • If tomorrow is not a screwup day then we can test 10,030 to 10150 levels. Provided markets behave normally. Else we can open a gapup.

  • Bank Nifty also witnessed long unwinding. I was long first, but when price action suggested, it may not move up plus huge call writing, I decided to exit and reversed positions.

  • Surprisingly, pain moved up while PCR came down.

  • On daily charts we are bearish and on 2 hourly and 30 minutes chart we are still consolidating.

  • There was all round call writing and put unwinding for the day.

  • Surprisingly, even the lower side put strikes of 24500, 24300 and 24000 witnessed put unwinding as in market is expecting bank nifty to fall further.

  • Data shows that bank nifty will be bearish, but given the volatile nature of markets, any thing is possible.

  • As of now Dow Jones is up 1%. Dow ended 1.47% up. Its still bearish but can affect the sentiment.

  • Crude Oil fell but is now on recovery.

  • Rupee is also inching higher daily. But very slowly and marginally.

  • RBI Vs. Govt. tension is going to affect the market or not, will be known by 09:30 to 10:30 itself. It may affect banking stocks. Reason for maximum call writing and put unwinding can be because of this reason yesterday. I am not sure how it will react today.

  • SGX Nifty as of now is up 75 points. Whether it cools by 09:00 am to give us a normal start is the question.

Update - At 08:20 am, SGX Nifty has given up early gains. I think we will start normal. Little breather to my positions.

Conclusion -

  • Nifty is in sideways mode with bearish bias.

  • Bank Nifty is in consolidation with bearish bias.

Game Plan -

  • My positions should remain safe as premium has mostly fallen.

  • Only 14 Rs. premium is left to be eroded in -10 X 24400 & +10 X 24600 bear call spread. One more bear day or sideways day will erode rest of the premium to Rs. 1.

  • Rs. 22 is left to be eroded in -10 X 24300 & +10 X 24500 bear call spread. One day of bearish movement will erode maximum premium from it.

  • Considering there was call writing, I think my naked -5 X 24400 call sell will remain safe with bear call spread.

  1. 25000 is caution point as bank nifty is revolving around it. Above it my positions can be in jeapordy.

  2. If 25000 is broken with momentum backed by some very good news, I might exit my lower bear call spread and hedge the upper bear call spread with buying some calls that are one step down.

  3. If bank nifty remains below 24700, then I wont have to do any thing on the open positions.

  4. If we touch 24400 somehow then I might write some bull put spreads if I am getting 20 points.

  5. I will take 6 lots tomorrow. Might sell naked call or put, if the direction is clear. I will be targeting 20 points only.

Note -

  1. I wont be updating positions and trades taken during the day, as I would be travelling and managing my positions on phone or on laptop.

  2. I will update the blog for any overnight development in morning.

Here are my open positions -

26 October 2018 - 01 November 2018.xlsx

Rohit Katwal

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