Analysis and Trade Plan - 22 July 2019

  • Today I am late for my analysis, but I was not concerned because I did not have any open positions.

  • Nifty has opened with a gap down and already fallen to 80 points.

  • Bank Nifty opened with a gap down and alreaddy fallen to 360 points.

  • Governments statement on no relief for FPI's has turned the sentiment bearish.

  • Majorit of small cap and mid cap stocks are already trading near or below 200 DMA. We can go for a bearish turn from here on.

  • Finally, India Vix has started to rise. Which means premiums will rise and so does the volatility. Little volatility can be good. Excessive can hit stoploss.

  • Till now, Reliance has not fallen with the market. If it does, results could have been catastrophic.

  • Results of HDFC Bank were within the estimates and that caused the profit booking. It is already 2% down and major reason for Bank Nifty being down.

  • Right now, markets are in very dangerous zone. Nifty has given a straight fall of 350 points. Bank Nifty has given a straight fall of 1400 points which calls for a technical bounce and market is oversold. But we can remain in oversold period for an extended period of time.

  • I am sitting outside markets waiting for a good opportunity to jump in. I won't recommend bottom fishing right now.

  • On Nifty, we may be headed towards 11100 levels and Bank Nifty might be headed to 28500 levels. So entry, exit and strategy needs to be precise right now.

Game Plan

  • I will wait for market to settle till second half of the day.

  • If there is a decent bounce, I will use it to write some call ratio spreads.

  • If going by the trend of -477, bank nifty heads towards -650 levels, I might do a call calendar at 29500 levels.

  • Premiums have increased so I might go for a bear call spread also.

Rohit Katwal

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