25th Jan' 2022 (Evening)

25th Jan' 2022 (Evening)  --  | Written on 26th Jan' 2022 at 10.00 PM |

  • After some disappointing days, what a day it was. Nifty making 440 point recovery from the lows and Bank Nifty making almost 1300 point recovery from its lows. 
  • My notes on 24th (Monday) pointed that it is a news based volatile markets and sharp movements can be expected. Interesting is that the Indices picked support from the exact levels mentioned in my notes on Monday. 
  • While on Monday there was practically no put writing, Tuesday was a day of unwinding. Be it long or short options on both sides, they were just unwound and exits taken. Probably because of the off, a day before the monthly expiry (one that is leading to the budget). Except Bank Nifty did see some reasonable put writing.
  • Nifty 
    • Support
      • First support at 17175
      • Second support at 17050
    • Resistance
      • First resistance at 17325
      • Second resistance at 17525
    • I would maintain a bullish outlook, till the Index is above 17050, be neutral between 16825-17050 and bearish if it breaches 16825 and falls below it. 
    • I say this because I expect tomorrow also would be a volatile day, it would still be following a volatile US, Pre budget day and monthly expiry.
  • Bank Nifty
    • support
      • First support at 37150
      • Second support at 36925
    • Resistance
      • First resistance at 37750
      • Second resistance at 38350
    • For Bank Nifty i would be bullish above 36925 and neutral between 36350-36925 and bearish below 36325. My comments are driven for the same reason as above. Though, Bank Nifty seems to be an out performer and a breakout could make major moves. Beware of volatility though.
  • FII on Tuesday sold heavily in cash, one of their biggest in recent times. The selling of 7000Cr was not complimented by any major selling on Index futures. Rather with shorts a decent longs were created. Probably the DII led buying from the lows, forced this to happen. 
  • FII positioning before the Budget in general is still bearish, though history tells that a bearish positioning before the budget is generally the bottom. Lets see this time which direction it goes.
  • So my view on cash market does not change, buy every dip in a systematic way. However, for leveraged traders, we need to be careful. Option sellers could stay away and buyers could actually make a decent money.
  • Dollar Index and US Yields continue to hover in the range and no surprises there. However, keep watching it closely as the FOMC outcome tomorrow could lead to some movements here.
  • For the reason mentioned in bullet point 3 above, Options OI are not useful for this expiry, somehow, It seems difficult as of now to predict an expiry range. Watch the price action and OI buildup tomorrow for this purpose. 
  • One Cue that I pick up is that there is no sharp movement in defensives like Gold, FMCG etc. So generally and in long term my outlook is bullish.

1. FII were net sellers for 7094 Cr today, while DII were buyers for 4534 Cr. A net selling of 2560 Cr from the institutional side.

2. FII's created 8885 longs and created 11448 shorts on the index futures

3. On the option front FII  unwound 101893 short calls and   created 25852 short puts. They also unwound 113586 long calls and  unwound 4275 long Puts.

4. For next week expiry, Nifty has the highest OI for PE at 17000 followed by 16500 and highest OI for CE is at 18000 followed by 17500. Highest Put writing was seen at no reasonable and highest call writing was seen at no reasonable levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 36000 followed by 36500 and highest OI for CE is at 38000 followed by 39000. Highest Put writing was seen at 37000 and highest call writing was seen at no reasonable level levels. 

6. Asian markets closed mostly in red on Tuesday and mixed today. Europe closed in green on both the days

7. US markets after making a stellar reverals on Monday, closed lower on Tuesday and trading in green today

8. The breadth of the market was extremely strong yesterday

9. Nifty opened at 17001 and made an intra day high of 17309 and a low of 16836 before closing at 17277 .The range of Nifty for the day was 473 points.

10. Bank Nifty opened at 36598 and made an intra day high of 37788 and a low of 36415 before closing at 37706 .The range of Nifty for the day was 1373 points.

11. US Dollar Index is trading at 96.127

12. Led by Banking and Auto, except IT all sectors closed in green

13. India VIX eased to 21.3575

14. US 10Y yields are at 1.783

15. Nifty futures saw short covering

16. Bank Nifty futures saw long buildup

17. US Brent oil eased to 89.12

18. USD / INR increased to 74.879

 

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