30th September' 2022 (Evening)

30th September' 2022 (Evening)  --  |  Written at 8.30 PM on 2nd October' 2022 |

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  • On Friday a combination of Some supporting cues globally, an expected MPC outcome and oversold domestic markets led to a short squeeze resulting in  #Nifty and #BankNifty ending up 1.6% and 2.6% respectively.
  • Both #Nifty and #BankNifty made bullish engulfing candles on the daily chart, an outcome of a spectacular one sided intraday rally. The levels now look something like below ..
  • Levels :
  • Starting from last week Monday, when the markets opened gap down, the Indices have been moving in a range. Friday literally covering all the losses from Monday till Thu.
  • I personally feel that the rally on Friday has confirmed two points. A conviction from the DII to buy the markets at 16800 or so and also that the range is here to play. A strong move will be seen only if this range is breached on either side.
  • This range seems to be 16725 to 17200 for #Nifty and 37300 to 38825 for #BankNifty. A sharp move could be seen outside this range. While there is no reason to believe markets could give a sharp rise, there is also support coming in at lower levels. Also the Dollar Index has eased. So the range could be played till it breaches.
  • The rollover of #FII positions from September series to October series was more or less 1:1 and this indicates a conviction from there side on a very limited upper side. Though the lower side needs to be watched. 
  • #FII have been selling again for some time and they have also entered the October series with a huge number of shorts on Index futures. I haven't seen this kind of shorts for quite some time. The #FII are now 84% net short on #Index futures. These shorts need a follow through and could send the market crashing down if they do. The #DII on the other hand have been supporting and hence if they force the #FII to cover the shorts, we could actually see a sharp short squeeze. 
  • The above will keep the market volatile for some time. 
  • The Dollar Index has eased to 112 levels and have to stabilize there is we expect some recovery in the equity markets. Oil price has also eased and this helps us. US yields have eased slightly as well.
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  • The IT stocks have picked some support at lower levels and may be good buys for cash. Maruti also showed support at lower levels of the range. Though ay leveraged position in these stocks is not advised. For that matter actually, one should avoid leveraged trading as of now. Keep your positions light or properly hedged.
  • Both #DowJones and #Nasdaq closed lower on Friday and may lead to a gap down opening for us here in India. We need to watch the initial low being protected on Monday. If it does, it could well confirm a short term support at the levels and may give a reasonable risk reward in the current range. Though one should be extremely wary of the risk reward and should watch the price action carefully on Monday.
  • Global events this week :
    • Chinese markets closed for the whole week.
    • Mon - German, British and US  Mfg PMI.
    • Tue - US jobs data and ECP president speech.
    • Wed - Indian markets closed, British composite and services PMI, US non farm employment and non mfg PMI
    • Thu - British construction PMI, US jobs data
    • Fri - Chinese Mfg PMI, US non farm payrolls and employment data.
  • Wish you a happy trading week ahead

1. FII were net selling for 1565 Cr today, while DII were buyers for 3245 Cr. A net Buying of 1680 Cr from the institutional side.

2. FII's created 4706 longs and unwound 2827 shorts on the index futures

3. On the option front FII  created 19789 short calls and   created 101282 short puts. They also bought 50830 long calls and  bought 73754 long Puts.

4. For next week expiry, Nifty has the highest OI for PE at 16700 followed by 16800 and highest OI for CE is at 17500 followed by 17200. Highest Put writing was seen at 16700 and highest call writing was seen at 17500 levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 37500 followed by 37000 and highest OI for CE is at 41000 followed by 40000. Highest Put writing was seen at 38000 and highest call writing was seen at 40000 levels. 

6. Asian markets closed mostly in red on Friday and Europe closed in green

7. US markets closed in red on Friday

8. The breadth of the market was extremely positive today

9. Nifty opened at 16798 and made an intra day high of 17187 and a low of 16747 before closing at 17094 .The range of Nifty for the day was 440 points.

10. Bank Nifty opened at 37660 and made an intra day high of 38811 and a low of 37386 before closing at 38631 .The range of Bank Nifty for the day was 1425 points.

11. US Dollar Index is at 112.16

12. Led by PSU Banks and metals, almost all sectors closed in green

13. India VIX is at  19.9675

14. US 10Y yields are at 3.829

15. Nifty futures saw long unwinding

16. Bank Nifty futures saw short covering

17. US Brent oil is at 85.56

18. USD / INR is at 81.521


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