Analysis and Trade Plan - 4 March 2020

  • Federal Reserve announced a rate cut of 0.50 basis point yesterday and dow tumbled by 750 points yesterday. Initially SGX Nifty shot up but later fell. SGX is currently hinting at a negative opening.

  • As more and more cases of #Coronavirus #Covid19 are getting out in India, fear and panic is increasing. I feel that India will be badly affected by it. Lack of proper facilities, dense population, unawareness on peoples part can some of the reasons it might become an epidemic. It is scary.

  • Yesterday was an inside bar day for Nifty and Bank Nifty. Both the index witnessed long buildup.

  • Previous gap down zone of 11400-11500 and 29700-30000 should act as tough resistance. There is no proper indicator or data suggesting a bounce or a fall right now. With India Vix at such high levels, even if we have to go down, it will be with volatile dead cat bounce. That is the reason I kept volume small and profit target small yesterday.

  • With rate cut by federal reserve, chances are increasing that other countries including India's RBI may cut rates. It will not help in fight against Corona Virus so I can't say how it will affect the markets.

  • One should keep a trail stoploss of 11434 on Nifty Future and 29650 on Bank Nifty.

  • Pain for Nifty and Bank Nifty continues to move down at 11300 and 29300 respectively.

  • For Bank Nifty, monthly pain does not often move up from multiple of 500's like 31000 or 30000 or 30500. Surprisingly it is at 30200 yesterday.

  • On Bank Nifty total of 8 lakh puts were written against 4 lakh calls written. Although total OI at Calls is 14 Lakh and Puts at 9 Lakh. That means more puts were written yesterday and might be a sign of trend changing till this weekly expiry.

  • Similarly, 22 lakh new puts were added on Nifty against 8 lakh calls. I am pretty hopeful that expiry can be somewhere between 11100 and 11400 levels.

  • To conclude, I am bearish for near term, but till 05 March will trade with following levels.

  • Will take slightly bullish positions above green and bearish below red. Also I am not taking any directional position. All positions are non directional with a hint of bearishness or bullishness. There are equal chances of any trade turning against initial direction.

Rohit Katwal

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