Analysis and Trade Plan - 29 July 2019

  • We started August with a positive note. Momentum was mainly on Ban Nifty and Nifty was subdued because of under performance by Reliance. If Reliance gets to 1190 levels, I might accumulate more quantity.

  • I purchased HDFC Bank in small quantity.

  • We are in a downtrend technically, but even if this is a dead cat bounce, Bank Nifty has the tendency to rise till 29800 levels and Nifty can check 11500 levels. Just a statement.

  • Nifty's long term support is at 11100. So if we have to see from different angle, then touching that also is possible. For Bank Nifty, long term support is at 28500 levels. Both these levels are also 200 DMA points.

  • Reliance is already touching its 200 DMA. HDFC Bank has already hit its crucial support and bounced back. If the support of 2250 is broken by HDFC Bank, Bank Nifty will also touch 28500.

  • I was planning to do -29200 PE 01 August 2019, +29000 PE 08 August 2019 but wasn't convinced and difference between spread price was too wide so I decided not to go with it.

  • I was not in favor of doing a -29000 PE, +28800 PE either, but didn't want to miss if it is a bull rally, so executed a little quantity from all accounts. Even if wrong, it will be a minor stop-loss or cost to cost exit.

  • We witnessed short covering on Nifty on Friday. Pain is steady for past few days.

  • Option writing was visible on 11200 puts while little call writing was visible on 11300/11400 strikes. Overall the PCR is sideways right now.

  • 11300 is the action point right now. Put writing and call writing were evident over monthly expiry. So we have a preliminary range of 11000 - 11600 for now. Give or take few points.

  • For Nifty all I can estimate is that trend is little bullish but slow. Things can change very fast.

  • Speculation on Bank Nifty is very low right now. We need further confirmation of trend.

  • Pain has started to move up and PCR at 1.20 is bullish.

  • Similar activity is on Bank Nifty too. I think we will find resistance at 29500 and we can have a monthly range of 28500-29500 for Bank Nifty.

  • There was put writing on all strikes with hardly any call writing. Moving above Friday's high, we can scale to 29800 levels in coming days. About 29700/29800 levels I will decide for a counter call.

  • For long positions, 29200 is my stop-loss level, and I think I won't need to hit it.

  • In case of normal opening, I will wait for market till 11:30 to decide on further direction.

  • Looking at SGX Nifty, I think we are having a sideways opening.

  • Smt. Nirmala Sitharaman gave an interview to Economic times and impact of it might be visible on our markets. I think we can take it as bullish as she is asking for a rate cut from RBI Governor. Let us see when market opens.


Trade Plan

  • Planning to hold existing -29000, +28800 PEs. Stop-loss level is 29200.

  • Planning calendar spreads based on premium I will receive.

  • In case we hit 29700 tomorrow, then will write some calls with ratio hedge.

  • In case we hit 29000 again, will write puts with ratio hedge and a stop-loss at 28750. If 28750 is breached, then will write calls too.


Rohit Katwal

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