Analysis and Trade Plan - 6 Aug 2019

  • In response to trade war by US, China let its currency depreciate from level 7. Indian Rupee also weakened and has touched ₹71.17 from ₹69.20. RBI interfered in spot and future market and that stabilized it a little.

  • #DowJones fell close to 3% yesterday. Ripple effects were already seen in SGX Nifty which is down by 90 points in the morning.

  • With #Article370 revoked from Jammu and Kashmir, Government is going to keep its focus there for some time now.

  • RBI Monetary policy will be announced on Wednesday and that can lift the sentiment.

  • FII's again sold for ₹2016 crore while DIIs bought for ₹1871 crores. Collectively FII's have sold near to ₹22000 crores till now.

  • #Nifty50, technically is bearish on all time frames. With today's gap-down, it will make another low.

  • On futures, there was a short buildup of 0.7 Million in OI.

  • PCR at 0.6 is bearish with weekly max pain moving down. Call writing was visible across 10900/11000 while no put writing was there. On monthly options also call writing was visible with some put writing at 10800. If market goes further down today then 10800 may be unwinded.

  • India Vix rose to by 10% to 16.58 yesterday which means more volatile days ahead.

  • With every day of bearishness, chances of Government intervention are increasing and so has been confirmed by Ministry of Finance. Meetings with various sector and leaders is scheduled.

  • Over all trend for Nifty is bearish.

  • #BankNifty is bearish on all time frames technically. I expected 27500 to be touched but not in the first 15 minutes of market opening.

  • We are in oversold conditions so a positive rate cut by RBI can start short covering and give a temporary bounce to markets.

  • Bank Nifty continues to for LLLH pattern. Huge shorts were buildup yesterday close to 0.2 Million in OI.

  • Pain is moving down with PCR at 0.52 hinting at bearish trend. Volatility has increased so action was on 28000 CE and 27500/27000 PEs.

  • On monthly options, 27500 hols close to 3 lakh in OI which will act as a huge support. It will be beneficial to write some sideways strategy from here on.

  • Overall trend for Bank Nifty is bearish.

Trade Plan

  • Overall trend is bearish, but we are also oversold. We can drift further lower and take support at 10800, 27400 levels. It will be wise to write some put calendars.

Rohit Katwal

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