Short Market Report 10.03.22

Both indices faced selling pressure from the top, especially after such a huge gap ups which no one had expected and posted big red candles while trying to cover the gap on the down side. It was a day for the option sellers who got the range right and had not carried any over night positions on the short side. Bank nifty still trading within the recent long term channel and nifty came very close to the short term trend line resistance. Both indices managed to move above 9 EMA but bank nifty closed below that.

In our previous market report we had discussed that going long would be nice but the expected move had already happened in the gap.

So, what’s exactly happening? Bull rally is back or is it just a retracement. If we see carefully, both indices have been rejected from the 38.2% retracement level using Fibonacci. Also, this up move was probably too fast too soon. Nifty rallied 1000 points in 3 days which is quite unprecedented.

Option Data: trading range banknifty 34000-35000; nifty 16500-17000
Future Data: Short Covering in both indices; no build up noted as of yet
Chart: hourly charts sideways; indicators suggesting underlying bullishness (not trusting them for now)
FIIs sold 1981 cr. DIIs bought 945 cr

What to expect tomorrow? Foreign indices are mostly in red and SGX nifty is indicating a 160 points drop. Hence, as always Friday may be a red day.

What to trade? We can go for at the money put if there is not much of gap down. Gap openings have been negating all the moves recently as whatever we analyse, the movement had already happened in the gap and unless you are not carrying a position in the right direction it becomes risky to trade intraday.

Conviction Neutral
Bias Bearish