19th Aug' 2022 (Evening)

19th Aug' 2022 (Evening)  --  |   Written on 21st Aug' 2022 at 5.00 PM   |

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  • After a stellar run, Friday gave a bit of  a shocker to the markets. After the bearish candles made by #Nifty and #BankNIfty  made on 16th Jun, this is the longest bearish candle. #Nifty closed 208 point below the opening level and #BankNifty closed 774 points below the opening level.
  • The trading range for #Nifty on Friday was 282 points and for #BankNifty the trading range was 911 points. Both the Indices made bearish engulfing candles and this becomes important as these are made after a wild upswing. Markets sharply rejected #Nifty at 17992 and #BankNifty at 39759. So these levels would remain as strong resistances for now.
  • Lets look at the levels :
  • If one closely looks at the levels above, the current trading range (First support and first resistance) are in the extreme high end of the larger trading range (Strong Support to Strong Resistance) and this is the case for most of the stocks. 
  • Since the market has seen a sharp rise, a breach on the higher side is less probable. We may either see some consolidation at this level or see some more correction. 18000 and 39800 would probably stay as a resistance for some time. 
  • Also citing this as the last week of this series, some unwinding of longs and may be creation of shorts is also logical. This is also visible if one sees #FII action on the futures and options side.
  • #FII unwound some longs on Index futures and created a large number of shorts on Index futures. Their net long position on Index is now lower than the start of this month. They are 48% net long as compared to 57% longs at the start of this month.
  • #FII also sold almost 160 thousand calls on Index against just 24 thousand puts sold on Index. 
  • I started mentioning that i will be cautiously bearish in my notes from 15th Aug based on the action on 12th Aug. However, I went wrong by 192 points on #Nifty and 350 points on #BankNifty. 
  • For tomorrow, i will keep a bearish stance, however, we will have to watch the breach of first support or first resistance to decide further action. While i have a hunch that we may a gap down opening and the first support may be taken down in the opening itself.
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  • Options OI indicate a decent support coming in at 17500 for #Nifty and for #BankNIfty this seems to be coming in at 38000 levels. lets see the action tomorrow...
  • On the global front, most of the global Indices closed in red on Friday with the most important #Nasdaq and #DowJones loosing 260 and 292 points respectively. We need to keep a watch on the opening of US Futures tomorrow.
  • The Dollar Index has creeped above 108 now and is being discussed that we may see 109 on it. I mentioned this in my earlier notes that Dollar Index is weak only below 103.4. This strength in the Dollar Index is drive from the fact that more rate rises are expected in US. #Inflation is not tamed yet and the recent economic data also suggests this. 
  • The 10 Year yields in US are also creeping higher and this would keep a lid on equity. #Nifty at 15150 was a good bet for this level of US yields, but #Nifty at 18000 probably is costlier. I actually expect a range bound action here and this range probably could be 17000 to 18000. While some random breach of the range cannot be ruled out. 
  • Watch these important global economic evets this week...
    • Mon - Chinese Prime lending rate
    • Tue - German Mfg PMI, British PMI and US home sales
    • Wed - US Core durable good, pending home sales.
    • Thu - German business climate and GDP, Euro Monetary policy and US GDP and Jobs
    • Fri - US Core PCE price Index.
  • Wish you a happy trading week ahead.....

1. FII were net buyers for 1110 Cr today, while DII were sellers for 1633 Cr. A net selling of 523 Cr from the institutional side.

2. FII's unwound 3651 longs and created 13342 shorts on the index futures

3. On the option front FII  created 160651 short calls and   created 23935 short puts. They also bought 93793 long calls and  bought 67995 long Puts.

4. For next week expiry, Nifty has the highest OI for PE at 17500 followed by 17600 and highest OI for CE is at 18000 followed by 17900. Highest Put writing was seen at hardly any level and highest call writing was seen at 17900-18000 levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 38000 followed by 39000 and highest OI for CE is at 395000 followed by 39000. Highest Put writing was seen at 38000-38500 and highest call writing was seen at 39000 levels. 

6. Asian markets closed mostly in red and Europe closed mostly in green,

7. US markets closed in red on Friday

8. The breadth of the market was extrememly red today

9. Nifty opened at 17966 and made an intra day high of 17992 and a low of 17710 before closing at 17758 .The range of Nifty for the day was 282 points.

10. Bank Nifty opened at 39732 and made an intra day high of 39759 and a low of 38848 before closing at 39656 .The range of Bank Nifty for the day was 911 points.

11. US Dollar Index is at 108.015

12. Except IT all other sectors closed in green

13. India VIX increased to 18.285

14. US 10Y yields are at 2.976

15. Nifty futures saw long unwinding

16. Bank Nifty futures saw long unwinding

17. US Brent oil eased to 96.09

18. USD / INR is at 79.923


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