Analysis and Trade Plan - 30 July 2019

  • Nifty witnessed addition of huge shorts yesterday.

  • Call writing on 11300 and 11400 was evident throughout the day.

  • PCR is bearish and Pain is also moving down.

  • Put strikes 10800-11250 witnessed long bulildup while short buildup was witnessed on 11200-11550 strikes.

  • There was significant long buildup on 11250 CE suggesting we can have a bounce before we fall.

  • On monthly options also there was writing on 11200, 11300, 11400 strikes showing resistance to move up. At the same time, 11000 PE has the highest OI which will be difficult to break.

  • Bank Nifty also added short positions by close to 1.1 lakh contracts citing short buildup.

  • Pain moved up but PCR is coming down. I think pain moved up because of initial 250 point gapup.

  • Call writing was evident on all strikes with put unwinding also there.

  • We can have an initial bounce and then we can fall to 29000 levels also.

  • Looking at SGX Nifty, we might open a little up again.

  • Major news this week is fed meeting and interest rate decision pending on Wednesday which will come out before Thursday start of the market.

  • NBFC crisis has spread to Indiabulls Housing Finance with accusation from Subramanian Swamy. Who knows we may have a roller coaster slide today.

Trade Plan;

  • Majorly I am holding short positions in market with little hedge.

  • Nifty is purely bearish hedged position.

  • I have also written some 28700 puts which can hedge upside a little.

  • I will have to wait for market to pan out. Yesterday Nifty was bearish, but Bank Nifty was almost flat. They had to eventually follow each other.

  • Whether Nifty will follow Bank Nifty or vice versa is the million dollar question.

  • If market bounces, then I would like to do some bearish strategies like calendar. If we fall to extreme, then at extreme low, might write some put calendar. It is too early to decide.

Rohit Katwal

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