4th Nov' 2021 (Evening)

4th Nov' 2021 (Evening)  --  | Written on 7th Nov' 2021 at 9.00 PM  |

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  • Markets in general has been opening gap up and then getting sold off making bearish candles. Nifty for the last three days and Bank Nifty for the last two days. A typical sell on the rise scenario. However the silver lining is that support comes in at lower levels and they haven't breached their lows of 29th Oct.
  • Nifty 
    • Nifty made a bearish candle on Wednesday and an inside candle in the Muhurat trading. The support of 17700 is still intact.
    • Support
      • First support at 17780
      • Second support at 17700
    • Resistance 
      • First resistance at 17980
      • Second resistance at 18075
    • While Nifty has picked up some support, it is still not out of woods. It is likely to face multiple resistance before it finally does break out. I would consider a close above 18050 a positive symptom for Nifty.
  • Bank Nifty
    • Bank Nifty also made a bearish candle on Wed and then an inside candle on Thursday Muhurat trading. The support indicated on my Tue notes was 39200 and it holds as of now.
    • Support
      • First support at 39600 (I expect a gap up opening and then would expect first support to come in at 39600)
      • Second support at 39200.
    • Resistance 
      • First resistance at 39775
      • Second resistance at 39980
    • I would wait and watch Bank Nifty to breach the candle generated on Wed on either side for a short term trending move. Till then some volatile moves can happen within the range.
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  • Bank Nifty has been generally underperforming due to profit booking on SBI and ICICI. Though HDFCBank and Kotak Bank have not lost ground. So I see this as a good sign. While ICICI is still seeing profit booking and see it weak for extremely short term, SBIN still seems strong and this along with HDFCBank and Kotak could provide strength to Bank Nifty.
  • Sectorally I feel that while IT and Bank Nifty will maintain their leadership, their is a good run way for FMCG and Pharma to catch up. Cash investors could look into these sectors.
  • FII sold for a combined number of 730Cr in cash. They however, bought index futures and also some long positions in stock futures. Though they also created a good number of shorts in stock futures. So any synergy is still missing.
  • DII on the other hand bought part of what FII sold. DII buying comes in at the lower end of the market and huge supply comes in at the higher side. 
  • Partly the pattern above was driven by the wait and watch stance due to the FED meet. FED on Thu came out with a pretty much expected pitch and the markets in US almost ignored it. Now our markets would respond to this in particular tomorrow. 
  • While Dollar Index is stable, the 10 Y yields in US have eased to below 1.5 and that is a good sign. Lets us see if that becomes a reason for some money of FII to come back. Technically also our markets are at good levels for the bounce back.
  • Tomorrow, i would expect a gap up opening, larger question is will it sustain. I would normally watch the first hour to gauge the sentiment. If the lows are protected, we may see some decent move.
  • The economic data coming in last week was largely positive and would support us. Asian markets have been underperforming for the last week. A positive Cue from there would help us.
  • The biggest risk i see again coming on is the rise of Covid cases in Russia, China and some European countries. Russia and Germany saw record cases and may threaten us.
  • For this week, Watch for PPI data from US on Tue, CPI data and jobless claims from US on Wed, Production data from China and Britain, Jobs data from US on Fri.
  • Be Lean and careful. Happy trading this week.....

Note : Considering a truncated trading day on the Muhurat trading day of Diwali on 4th Nov, For picking up most of the data points, the trading on 3rd Nov and 4th Nov has been combined and a combined effect has been picked for analysis. 

1. FII were net sellers for 729 Cr today, while DII were buyers for 233 Cr. A net selling of 496 Cr from the institutional side.

2. FII's created 5361 longs and unwound 797 shorts on the index futures

3. On the option front FII  sold 156885 calls and   sold 58492 puts. They also bought 151848 calls and  bought 78707 Puts.

4. For next week expiry, Nifty has the highest OI for PE at 17500 followed by 17800 and highest OI for CE is at 18000 followed by 18300. Highest Put writing was seen at 17800 and highest call writing was seen at 18000 levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 39000 followed by 39500 and highest OI for CE is at 40000 followed by 41000. Highest Put writing was seen at 40000 and highest call writing was seen at 39600 levels. 

6. Asian markets closed mixed on all the days and Europe closed in green on Thu and Fri

7. US markets closed in green on all the three trading days

8. The breadth of the market was positive

9. Nifty opened at 17935 and made an intra day high of 17947 and a low of 17900 before closing at 17916 .The range of Nifty for the day was 47 points.

10. Bank Nifty opened at 39669 and made an intra day high of 39734 and a low of 39514 before closing at 39573 .The range of Nifty for the day was 220 points.

11. US Dollar Index is trading at 94.207

12. All sectors closedon the Muhurat day

13. India VIX eased to 15.7475

3814. US 10Y yields are at 1.455

15. Nifty futures saw short buildup on Wed and long buildup on Thu

16. Bank Nifty futures saw short buildup on Wed and long buildup on Thu


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