Market Outlook for Opening on December 05, 2018

Stock/ Index

NIFTY 50

Long term trend

Has turned mildly positive but still inconclusive

Short term trend

Upward sloping, spot above EMA

Bollinger band

Below the upper channel of the bollinger band

Oscillator 2

Bullish (weaker than yesterday)

Oscillator 3

Positive cross over persists, however, the strength has diminished

Closing price (Spot price)

10,869.50

Change from previous day

-0.13%

Nifty future premium (december expiry)

 + 32.65

Current position bias

Short bias, no change in position since yesterday, no new trade for the day carrying current positions

Maximum Open interest

Puts of 10,000 / 10,200 / 10,500 / 10,700/ 11,000 Calls of 10,900 / 11,000 / 11,500

 

Conclusion

  1. Today too the markets defied the global cues albeit in the opposite direction. It was very flat with a negative bias the whole day, while it gave a scare of dropping mid-day but then recovering quickly thereafter. The weakness today was led by the banks.
  2. As of now US markets are deep in the red with losses of more than 2% and unsurprisingly led by the financial sector.
  3. Tomorrow's RBI policy awaits the markets mid-day. In my opinion although people may be surprised by the positivity of policy the markets are already factoring in the same. I expect markets to react wildly at the time of the policy with a knee jerk positive reaction, however, it will eventually close in the red, probably deep red. Given an opportunity "SELL".
  4. The technical undertone is positive, however, the level of positivity seems to have reduced, I will pre-empt and sell given the right opportunity.
  5. There are a lot of events lined up, hence, market may react with volatility, however the most important event is the RBI policy which will be out of the way by tomorrow end of the day. I expect financials to lead the downfall tomorrow.
  6. Open interest shows that markets are expecting a volatile month with a downward bias. Today, in spite of the indices being in the red the Put quotes have either fallen or have increased very marginally signalling reduction in volatility expectation. Put call ratio is increased marginally to 1.31 from 1.27.
  7. Time to take short positions, aggressive players can look at initiating shorts prior to the monetary policy while those with less risk appetite can do so after the monetary policy. In case if markets go up post the policy, sell into that rally. You can look at:
    1. Sell 10,900/ 11,000 CE, or,
    2. Sell Nifty Future - above - 10,870 and sell 10,850/ 10,800 PE - CMP - 167/ 149

 

Disclaimer: The views expressed herein are purely personal and basis experience and not a recommendation to buy or sell. We are not SEBI registered investment advisors or research analysts and these are positions taken in personal capacity.

Search