Day trading guide for Monday’s market

By Chandan Taparia, Motilal Oswal

Nifty opened positive on Friday and witnessed buying momentum for most part of the session to extend gains towards the 11,072 mark. It took support near 10,800, which was its 200 DEMA ,and finally negated the formation of lower highs and lower lows on the daily scale after six trading sessions.

Nifty formed a bullish candle on the daily scale and a bearish candle on the weekly scale, indicating some bounce back from lower levels. However, supply pressure remained intact at higher levels. Now it needs to hold above the 11,000 mark to witness a bounce towards 11,111 and then 11,250 marks while on the downside supports are seen at 10,950 and then at 10,800 levels.

Stocks (spot levels) :

Derivatives:
India VIX moved up by 3.14% from 20.04 to 20.68 level and has negated its lower highs of the last 3 weeks. VIX recently spiked to 23.81 which is giving a volatile move with profit decline in the market. Now it has to cool down to 20-18 level to get the bull’s grip.

Since it is the beginning of new series, options data lay scattered at various strike prices. Maximum Put open interest stood at 10,500 level followed by 10,000, while maximum Call OI was at 11,500 followed by 12,000. There was marginal Call writing at strike prices 11,300 and 11,600 and Put writing at 10,500 and 10,600. Options data suggested a wider trading range between 10,500 and 11,500 levels, while an immediate range has shifted to the 10,800-11,300 zone.

Bank Nifty managed to hold its previous day’s low and finally negated the lower top and bottom formation after six sessions. It gained more than 500 points to close near its crucial mark of 21,000. It formed a small bullish candle on the daily scale and a bearish candle on the weekly scale. Now, it needs to hold above 21,000 level for a bounce towards 21,500 and then 21,750 levels, while on the downside, support was seen at 20,750 and then 20,400 levels.

Nifty: Options strategy: Bull Call spread: +11,050 CE – 11,200 CE : (1st October, weekly expiry)

Buy 1 lot of 11,050 Call @ 98
Sell 1 lot of 11,200 Call @ 38

Net premium received: 60 points

Keep SL of net premium of 25 points: Risk of 35 points
Keep target of net premium of 130 points: Reward of 70 points

Rationale:
Nifty has taken support near 10,800 level and negated lower highs and lower lows of the last few sessions.
Put Call ratio has seen recovery from lower levels with Put writing at immediate strikes could hold support.
Volatility is not much spiking up which is suggesting some stability.
Thus, suggesting Bull Call Spread to get the benefit of bounce back move in the market.

Fx Technical:
By Mr. Kishore Narne, Head – Currency & Commodities, MOFSL

USD/INR Status: The pair will remain in a higher range in the short-term.

CMP: 73.92, Target: 74.60, Stop Loss: 72.70

Trade: Bias for the pair remains sideways-to-positive as long as 72.70 is held as strong support. However, upside too will be capped at 74.60 as it will act as strong resistance. Buying around 73.35 is advised.

EUR/USD Status: The pair is likely to trade in with negative bias for short-term.
CMP: 1.1622, Target: 1.1500, Stop Loss: 1.1800

Trade: The pair is likely to trade with negative bias and it looks to target 1.1500. Selling on rise around 1.1700 is advised but our bias will negate if price break below 1.1800.

Commodity Calls: Amit Sajeja, AVP- Commodities, MOFSL