Day trading guide for Monday

NIFTY OUTLOOK

Chandan Taparia, MOFSL

The Nifty index made a gap-down opening on Friday but partially filled a pending gap made on Feb 2 with support at 14,350 levels. Even though it moved in a range in the first half of the day, the second half saw strong positive momentum which took the index towards the 14,800 zones. It formed a strong bullish candle on the daily scale and closed the day with a handsome gain of 186 points. It formed a bullish piercing line pattern on the daily scale and reclaimed its 50-double exponential moving average. However, it continued to form lower highs but closed on a positive note following a losing streak that lasted five trading sessions. Now, it has to decisively hold above the 14,700 zone to make an upmove towards 14,900 and 15,000 zones. On the downside, immediate support exists at 14,600, and then 14,450.

STOCKS

ET CONTRIBUTORS

DERIVATIVES

Fear gauge India VIX declined 0.46%, from 20.08 to 19.98. A cooldown in VIX below the 20 zone is required for a bullish grip and a smoother move in the market. A lower VIX with a rising put-call ratio indicates that bulls may get some stability after losing ground in the past few sessions. On the options front, the maximum put open interest is at the 14,500 strike, followed by 14,000, while the maximum call open interest is at 16,000, followed by 15,500. Call writing is seen at 15,500, and then 15,600, whereas put writing is seen at 14,500, and then 14,400. Options data suggests a wider trading range between the 14,350 and 15,000 zones.

Bank Nifty made a gap down opening but bulls were able to show strength, pulling the index above the 34,000 mark. It concluded the day with a gain of 305 points. However, it has been underperforming the Nifty index for the past few sessions. It formed a bullish candle on the daily scale after a series of weak sessions. It now has to negate the formation of lower highs of the last five trading sessions to attract a short covering move. It needs to hold above the 34,250 zone to witness a bounce towards the 35,000 level. On the downside, support exists at 33,500 and 33,333 zones.

Nifty bull call spread: +14,800 CE-14,950 CE (Mar 25)

Buy 1 lot of 14,800 call @ 129

Sell 1 lot of 14,950 call @ 65

New premium paid: 64 points

Keep stop loss of net premium of 25 points: risk of 39 points

Keep target of net premium of 140 points: reward of 76 points

RATIONALE

A major trend is positive even after the recent correction, so any declines could be bought again. India VIX has cooled down with a rise in the put-call ratio, indicating an overall bullish undertone of the market. Put writing is intact at lower strikes, which could provide support.

FOREX TECHNICAL

Kishore Narne, Head – Currency & Commodities, MOFSL

USD/INR status: A sideways-to-higher move looks possible in the short term.

CMP: 73.32

Target: 74.10

Stop loss: 72.75

Trade: The short-term trend looks bullish as long as the pair is trading above the support of 72.75 level. Buying on dips is advised, targeting higher resistance at 74.10.

EUR-USD status: The short-term trend remains negative.

CMP: 1.1910

Target: 1.1780

Stop loss: 1.2010

Trade: The pair appears to have short-term resistance near the 1.2010 mark and a fall towards the lower support of 1.1780 looks likely. Selling on rallies is advised.