4th May' 2022 (Evening)

4th May' 2022 (Evening)  --  | Written at 10.00 PM |

  • So, It was an oops !! day today. Markets opened gap up with some cheer, but then came the spoiler from RBI and the indices tanked. In a surprise move, RBI declared a 40bps repo rate increase. Probably an Inflation driven decision, this caused some anxiety in the markets and led to a sharp fall.
  • Nifty lost almost 500 points and Bank Nifty lost 1100 points in a almost vertical fall. Nifty and Bank Nifty breached its important levels. Almost similar was the situation with many major stocks. 
  • So let us look at the levels below :
  • Nifty breached its support of 16875 and Bank Nifty breached its support of 35500. With this now the next important support we are looking at is 16425 on Nifty and 35000 on Bank Nifty. Concern is if these are taken down, we are looking at a deeper correction to 16200 and 34000 on Nifty and Bank Nifty respectively.
  • As of now the FED has declared a rate rise of just 25 basis points against an expectation of 50 points. As i am writing the notes, the US indices are showing some relief. Now this could trigger some relief for us as well. But before making any assumptions, i would wait for the close in US today and the opening tomorrow.
  • As i mentioned, any meaningful recovery in US would trigger after a close of 13500 on Nasdaq and 34050 on Dow. Will wait for it
  • FII today sold for 3288 Cr in cash and DII absorbed just 1338 Cr out of it. There was just no buying in the second half of the day today. FII also shorted the indices heavily and unwound their longs on Index futures.
  • With the FED outcome and a green close in US today, if a follow up of the shorting today, is not seen tomorrow (which I do not expect), this could actually trigger a strong short covering tomorrow. 
  • The options OI actually saw a heavy call writing today, with practically no put writing. So on the options side this could give nightmares to option writers tomorrow. In fact I mentioned this yesterday, that in short term, traders with heavy exposure to be careful.
  • Some days are not for options writers, and more wealth is destroyed than created in these days. Frankly speaking, these days call for some smart strategies. Fortunately, i had deployed some of these and was rewarded accordingly.
  • Dollar Index is now at 103.315 and the US 10 Year yields are at 2.987 (almost 3). I believe the market had prices in 3.5, so will this help? maybe yes.
  • Oil is rising again now and is now at 108 USD. This will keep us anxious for some more time. Lets see.
  • US data on non farm employment and non mfg PMI was not encouraging. (as of now just a data point).
  • However, yet to be seen is the impact of the RBI increase. This could affect the liquidity in the markets and lead to some pressure. I mean the DII buying may get affected by this. This was partly visible in the data today.
  • I believe some clarity would evolve on this in a day or two. Lets watch.......

1. FII were net sellers for 3288 Cr today, while DII were Buyers for 1338 Cr. A net buying of 1950 Cr from the institutional side.

2. FII's unwound 1469 longs and created 36334 shorts on the index futures

3. On the option front FII  created 111905 short calls and   unwound 9830 short puts. They also created 93319 long calls and  created 21503 long Puts.

4. For next week expiry, Nifty has the highest OI for PE at 16500 followed by 16000 and highest OI for CE is at 17000 followed by 17100. Highest Put writing was seen at 16500 and highest call writing was seen at 17000 levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 35000 followed by 35500 and highest OI for CE is at 36500 followed by 36000. Highest Put writing was seen at 35000 and highest call writing was seen at 36000 levels. 

6. Asian markets closed mostly in red and Europe trading in red

7. US markets trading mixed as of now with Nasdaq in red and Dow flat.

8. The breadth of the market was extremely weak today

9. Nifty opened at 17096 and made an intra day high of 17132 and a low of 16623 before closing at 16677 .The range of Nifty for the day was 509 points.

10. Bank Nifty opened at 36266 and made an intra day high of 36309 and a low of 35127 before closing at 35264 .The range of Nifty for the day was 1182 points.

11. US Dollar Index is at 103.403

12. All sectors closed in red today. Metals, Auto and banks were the biggest losers

13. India VIX increased to 21.8775

14. US 10Y yields are at 2.977

15. Nifty futures saw short buildup

16. Bank Nifty futures saw short buildup

17. US Brent oil eased to 108.78

18. USD / INR eased to 76.254


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