Analysis and Trade Plan - 24 July 2019

  • Last one hour fall in Nifty and Bank Nifty was unwarranted. It was expected but not with the pace with which it happened.

  • HDFC Bank, Maruti and M&M were the reasons for the negative market sentiment. Rest of the stocks were stable, else the fall would have been intense.

  • SGX Nifty is little change over night. Dow Jones rallied 150 points and Asian Markets are trading in green.

  • Shorts were added to Nifty and Bank Nifty futures, but I cannot rule out consolidation and short covering in current expiry and hence the rationale behind expiry near 29200-29350 and 11350.

  • I do not see any currency or oil risk at the moment.

  • Finance ministry has given statement that it may consider bringing all corporate under 25% tax category which can be a trigger for some up move in the short term.

  • Results of Bajaj Twins are due on expiry which can be an event for Nifty, but we will be out from our position till then so it will not affect us.

  • Fight on Nifty has now come down between 11300 and 11400 levels and this is where market can expire.

  • Going forward 11300/11200 will act as a strong support which will not be broken easily. 11500 to the upper side will act as a strong resistance.

  • Overall, pain is moving down and PCR at 0.70 is still in bearish territory.

  • Bank Nifty is also taking support at 29100 levels. Seems like 29000 will act as a base for now. fight is going to be between 29000 and 29500 levels.

  • PCR is highly bearish right now with 0.40 and max pain is also slowly moving down.

  • But I am hopeful that 29000 will not be broken and will hold.

  • In current scenario sideways strategy with bearish direction are best and that is what I did yesterday. Although the outcome is not know, it does save me from unnecessary volatility.

Trade Plan

  • I would wait for market to develop a little.

  • Will do pre-expiry trading in Intraday.

  • Will have to cover some strangles.

  • Will right some short call butterflies or more iron flies to benefit from sideways market. May even do call calendar if bearish sentiment persists.


Rohit Katwal

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