Analysis and Trade Plan - 8 August 2019

  • Nifty futures witnessed long unwinding yesterday.

  • Pain again moved down to 10900 with PCR at 0.57 on weekly. On monthly data also pain further moved down to 11100 with PCR at 1.02. We are in a strong bear grip.

  • Call writing was evident to 11000/11100 strikes and later it spread to 10900 strike also as market collapsed.

  • Put unwinding was seen at 10800 strikes which also has the highest concentration of OI right now. It will act as a strong support. But if broken market can drop significantly.

  • Close to 1.7 Million contracts were unwinded at puts while 2.4 Million new contracts were written suggesting the bearish sentiment right now.

  • If we go purely by data, then I won't be surprised if 10800 is soon broken and so does 10700. I hope it is not today.

  • Bank Nifty also witnessed short buildup.

  • Pain continues to move down to 27800 and PCR to 0.52 on weekly data.

  • After a long time PCR for monthly fell to 0.75.

  • All the strikes from 27900-28500 witnessed massive call writing.

  • Put unwinding was also visible with no new OI addition.

  • Approximately 2.5 million new OI was added to call options while 2 lakh was unwinded from puts on weekly options.

  • Yesterday, Dow Jones opened lower and hit a -500 and recovered some round later on.

  • SGX Nifty also as a result hit 11750 and recovered later.

  • Right now, SGX Nifty is at 10860 and we should open normal. Sudden fall was due to further fall in rupee after Pakistan cut diplomatic channels but it was a non event so markets soon recovered.

  • By closing Dow Jones recovered all losses.

  • RBI Monetary Policy Committee reduced interest rates by .35 bps. .25 was expected and .50 would have been surprise. They chose the balanced approach.

  • Today there can be huge volatility because of weekly expiry. 11000 and 28000 can act as huge resistance if short covering has to happen.

  • FIIs just sold for 400 crores and DIIs bought for the same amount so there can be little consolidation as big guns are drying now.

  • I am trading with an open min right now. We can open and slide. We can open and rise. We can open sideways and remain sideways and shoot to either side. Let us see what market gives us today.

Here is the glimpse of OI witness to bearish sentiment.



Rohit Katwal


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