Analysis and Game Plan - 5 November 2018

  • Last week we had a good rally, suggesting for the first time that worst may be over for Nifty and Bank Nifty.

  • Rally was mainly because of positive developments on Iran Sanctions with respect to India. Falling of Crude Oil prices. Positive statement and development on US-China trade war.

  • Furthermore, Rupee has started strengthening again. Pattern formed on friday is a reversal from top pattern which may be good for the markets.

  • I am bullish this week but not for long period. We form a shooting star type of pattern on Diwali Mahurat Trading most of the time. After that we fall. Now thats what I have seen and I can be wrong.

  • Political Uncertainity will be there in December. 11 December, 2018 is the result announcement day and it will have effect on markets as it will set tone for elections next year.

  • In November, 5 state election will call for perception change in markets and we may be bullish and bearish according to that, weighing in probabilities of BJP winning.

  • Today, result of State Bank of India is pending which can add a little volatility to Bank Nifty.

  • Data and Technical Parameters are all bullish right now.

  • India vix has started to cool, but its still not in comfortable zone.

  • Nifty saw call unwinding till 10600/10700/10800 and put unwinding at 10200. 10500 saw huge put writing.

  • Bank Nifty witnessed heavy put writing on all counters and for first time in many weeks little call writing was witnessed above 26000 calls.

  • SGX Nifty is little down along with world markets, so little sideways to negative move is expected.

Conclusion - This weekly expiry, I am trading with bullish bias.

Game Plan -

  • I am planning to hold all my positions.

  • I am expecting an opening on Bank Nifty between 25650 to 25800.

  • Near 25635, I will see in what hedged trade I can take 20-25 points.

  • I have a room for 10-15 lots which I will take in two go's.

  • 25500 is crucial for the long positions.

  • My positions are such that it benefits most when bank nifty is little up and does not go below 25600. It will also lose premium by virtue of opening as Tuesday is expiry.

  • So if 25600 is broken, I will square off my bull put spread and might add some naked ratio calls.

  • If market keeps on rising then also I will hold my upper positions till 26200.

  • Based on what the news is and how daily candle pans out, I might do a short strangle with 5 5 lots each.

Rohit Katwal

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