Analysis and Trade Plan - 25 September 2019

  • Markets were behaving abnormal on Friday and Monday, so any kind of analysis was futile. When we have an intraday swing of 700 points on Nifty and 2500 on Bank Nifty, then no kind of analysis can predict any thing. Because 200 point and 600-700 point move becomes a new normal and we cannot have that much wider stoploss.

  • Increased Vix also helped in increase of premiums, so by Monday I was to take positions atleast 1800 points away on Bank Nifty. I did pure sideways strategies.

  • SGX Nifty is down by 30 points hinting at a sideways to negative start for our markets.

  • Our market is not following the global markets right now due to the big announcement of corporate tax cut.

  • On Monday, FIIs were net buyer with more than 2000 cr and yesterday they were net sellers with 800 Cr.

  • Nifty witnessed some short covering yesterday.

  • Max Pain has started to move up on weekly as well as monthly charts, so trend is bullish.

  • PCR is at 1.45 again hinting at bullish positions.

  • Yesterday, puts were unwinded at 11300, 11100 strikes. We need to see whether it was unwinding or rollup. Comparatively, slightly more puts were added overall. In October month, major writing was done at 12000 Calls and 11500 Puts. It feels like 11500 is going to be strong support for now.

  • Bank Nifty witnessed long unwinding.

  • Max Pain is constantly moving up but PCR slided to 1.05 hinting at sideways direction.

  • More calls were written compared to puts yesterday.

  • I think this rally will consolidate here for some time now. Also intraday swings can be pretty volatile for few days, so it is better to stay at safe distance. Consolidation does not mean that volatility will subside. It can remain sideways with wild swings.

I plan to cover my positions today. The premium has already fallen, so I will lock in profit. It will also give me capital back for fresh deployment.

Rohit Katwak

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