market

Day trading guide for Monday's session


Chandan Taparia


The Nifty index opened flattish but failed to hold above the 14,600 zone, and drifted sharply towards 14,350. It cascaded by more than 250 points and closed the session in the deep red with a loss of around 1.5 per cent. Nifty50 formed a bearish candle on the daily scale and a doji with a long upper shadow on the weekly scale, which indicates that selling pressure is seen at higher zones. The index may continue to remain highly volatile ahead of the monthly expiry and Union Budget 2021. Now, till it remains below the 14,500 zone, weakness could be seen towards 14,250 levels, while on the upside, key hurdles exists at 14,600 and 14,750 levels.

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Stocks (spot levels)

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DERIVATIVES

The NSE’s India VIX index moved up 1.09 per cent from 22.18 to 22.42 . Volatility needs to cool down below the 20 zone to commence a fresh leg of rally for the new lifetime high territory. However, volatility could be comparatively higher ahead of the Budget 2021. Bank Nifty made a gap-down opening and witnessed sustained selling pressure throughout the day with underperformance in all banking counters. The rate-sensitive index plunged more than 1,000 points and touched an intraday low of 31,119 . It formed a bearish candle on the daily scale, followed by a bearish engulfing candle on the daily and the weekly scales. Now, till it remains below 31,750 , a bounce could be sold for a downward move towards 30,500 while on the upside, hurdles are seen at the 32,000 and 32,200 zones.

Nifty options strategy


BULL CALL SPREAD: +14,400 CE – 14550 CE (Jan 28th, weekly expiry)

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Buy 1 lot of 14,400 call @ 130

Sell 1 lot of 14,550 call @ 68

Net premium paid: 62 points

Keep a stop loss of net premium of 25 points: Risk of 7 points

Keep a target price of net premium of 140 points Reward of 78 points

Rationale

The major trend is positive and declines could be bought again. India VIX was up but the bullish undertone of the market is intact ahead of Budget 2021. The put-call ratio has increased with put writing at immediate strikes.

Forex technical


Kishore Narne, head–currency and commodities, MOFSL:


USD/INR status: The short-term bias looks weak for the pair.

CMP: 72.98

Target: 72.30

Stop loss: 73.50

Trade: The pair is likely to trade in a lower range as long as 73.50 is capped as resistance. Selling is recommended, targeting the levels of 72.60–72.30.

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USD/JPY status: The pair is likely to resume its positive move in the short term.

CMP: 103.80

Target: 105.50

Stop loss: 102.50

Trade: The pair is likely to gain momentum in the upcoming sessions, and it looks to target 105.50 levels. Dip buying is recommended as long as the price holds above 102.50.

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Commodity Calls


Amit Sajeja, VP- Commodities, MOFSL

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