26th Nov' 2021 (Evening)

26th Nov' 2021 (Evening)  --  | Written on 28th Nov' 2021 at 9.00 PM |

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  • I mentioned in my last notes on 23rd Nov, that Covid has posed a new threat to global markets and this needs to be watched. The rising cases in Europe and US, received the news of a new potentially contagious variant of Covid as a market breaker and global markets crumbled under its weight. The only thing green was volatility Index :-)
  • "Omicron" as its called is the new buzz in the scientific and political worlds and has triggered a fresh set of restrictions and some hot discussions on potential precautionary measures. While, this is to be watched and i pray that the threats anticipated never become a reality, it has come to the stock markets in more than one way.
  • On one side, it is a threat to the economic recovery seen and projected going forward, on the other side it may temper the tone and mood of central bankers from withdrawing liquidity and tapering the bond buys. We need to watch and see more to understand the unfolding story.
  • My personal view is that the markets were looking for a reason to correct and have reacted far too early and fast in anticipation of the worst. This is actually good news for cash investors, while, the leveraged traders have to be cautious.
  • Nifty
    • Nifty after opening gap down, made a strong bearish candle on the daily chart and a second bearish candle on the weekly chart. Technically it is now below its critical levels (100DEMA and 20WEMA), indicating bearishness. However, the last push came due to the Covid news, so this sentiment is more important as of now. 
    • Support
      • First support at 16975
      • Second support at 16750
    • Resistance 
      • First resistance at 17225
      • Second resistance at 17475
    • Global Cues tomorrow will be important to set the mood of the street. However, protection in early hours of trade tomorrow, of the first support mentioned above, could help trigger a a short covering till the first resistance.
  • Bank Nifty
    • Bank Nifty commentary is very similar to the comments for Nifty above.
    • Support
      • First support at 35700
      • Second support at 35350
    • Resistance
      • First resistance at 36350
      • Second resistance at 36650
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  • I feel that the monthly closing on Friday left the FII 70% long on the index futures and this was because they did not carry over their shorts to December series. I consider this as a good sign. The sudden change of stance on Friday was driven because of the Covid news. The continuation of the shorts is dicey, if the Omicron news fizzles ( I pray for this in interest of humanity), with more clarity on the severity of the variant, clarity would evolve on the direction of the markets as well.

  • The fall on Friday was primarily driven due to the Covid news, so a reversal could propel the indices back to the levels of Thu. So watch if the selling and shorting of Fri gets a follow through. 
  • FII on Friday shorted around 16000 Shorts and unwound 21500 Longs on Index futures. FII also sold for 5785 Cr in cash. This was a bit unexpected for me, after the shorts not being carried over to the December series. So lets see...
  • The Dollar Index has already eased to 96 levels on Friday and the US 10Y yields have also eased below 1.5 from their highs. So the futures here have started factoring in an accommodative stance by the bankers.
  • Options OI as of now indicate a heavy call buildup and show support only at 17000 for Nifty and 35500 for Bank Nifty. The call writing has been a bit away, so this gives a strong hope for a pull back at least. 
  • Keep a strong eye on the Covid updates as i believe that is one strong cue now, that would set the head winds for the markets. 
  • The economic data last week from Europe was mostly positive and from US was slightly lower than expectations. For this week, watch for FED chair Powell testimonial on Mon, Chinese PMI, Euro CPI, Consumer confidence from US on Tue, Chines, German and British Mfg PMI, Non farm employment data and US Mfg PMI on Wed, US Jobless claims on Thu, British PMI, US PMI and US employment data on Fri.
  • Wish you a happy trading week ahead......

1. FII were net sellers for 5785 Cr today, while DII were buyers for 2294 Cr. A net selling of 3491 Cr from the institutional side.

2. FII's unwound 21428 longs and created 15949 shorts on the index futures

3. On the option front FII  sold 138770 calls and   sold 25353 puts. They also bought 86035 calls and  bought 70645 Puts.

4. For next week expiry, Nifty has the highest OI for PE at 17000 followed by 16800 and highest OI for CE is at 17500 followed by 17300. Highest Put writing was seen at 17000 and highest call writing was seen at 17300 levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 35000 followed by 36000 and highest OI for CE is at 37000 followed by 37500. Highest Put writing was seen at 35500 and highest call writing was seen at 37000 levels. 

6. Asian markets closed in red and Europe also closed in red

7. US markets closed in red on Friday

8. The breadth of the market was extremely weak on Friday

9. Nifty opened at 17338 and made an intra day high of 17355 and a low of 16985 before closing at 17026 .The range of Nifty for the day was 370 points.

10. Bank Nifty opened at 36830 and made an intra day high of 36868 and a low of 35904 before closing at 36025 .The range of Nifty for the day was 964 points.

11. US Dollar Index is trading at 96.078

12. Except Pharma, all sectors closed in red today

13. India VIX inreased to 20.8025

14. US 10Y yields are at 1.482

15. Nifty futures saw long unwinding

16. Bank Nifty futures saw short buildup


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