Analysis and Trade Plan - 8 October 2019

  • Dow Jones fell 1% yesterday after Donald Trump again increased rhetoric and banned 8 Chinese companies from security markets.

  • America also withdrew pension fun from investing into China ahead of trade talks scheduled on Friday and Saturday.

  • SGX Nifty reacted immediately and fell 50-60 points but is on recovery mode now.

  • Although impact would have been severe but is not, as it might be a pre-talk rhetoric.

  • We have been falling for 6 straight days now. A little consolidation is expected. Again, it is a possibility. Data is bearish.


Nifty

  • On daily charts, we are now in no trend while 2 Hourly and 30 minute charts are bearish. We cannot rule out a technical bounce.

  • Nifty witnessed some short buildup. OI was not that great.

  • Max Pain moved further down to 11200 with PCR at 0.56. India Vix at 17.83 also increased.

  • Any significant writing was only visible on 11200 calls and 11100 puts so I can assume right now that bearishness is diminishing.

  • OTM PCR is extremely bearish at 0.42.

  • Total fresh OI addition was of 23 lakh out of which 12 lakh was on call and 10 lakh on puts. So we have a balance right now.

  • On monthly options, 11200 call and 11000 put witnessed maximum option writing. Also 11000 happens to be strike with maximum OI right now. It might be where this bloodbath might stop.

  • 23 lakh contracts were added to calls and 17 lakh to puts. So clearly we have call writing for now.

  • FIIs were again net sellers and DII net buyers. We had a net buying of 410 crores.


Bank Nifty

  • On daily charts we have entered a sideways phase according to me. On 2 hourly and 30 minutes chart we are bearish.

  • Nifty Futures witnessed short covering.

  • Max Pain moved further down to 28000. PCR at 0.55 is still bearish.

  • In options, 28000 calls and 27500 puts witnessed maximum writing.

  • There was addition of 56 lakh options of which 30 lakh were on call side and 26 lakh on puts.

  • With 600-700 point new normal on Bank Nifty, even the option data is distorted and not giving a clear picture.

  • On monthly options, there was double the amount of puts written than calls.


I will remain bearish till we are below 11300 and 28000. If we cross these levels, then trend might start to change. Else we can drift lower. For now, we are bearish and may be forming a base.


Personally, I am thinking of buying CONCOR shares.


Rohit Katwal

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