A small ray of hope for bulls as Dow Jones Futures trade in green!

Update: Nifty has recovered 150 points from the day’s low and was seen trading above the 14,600 mark. Meanwhile, Sensex was trading above the 49,100 mark.   

Amongst Nifty 50 index, HDFC Bank, HDFC, ICICI Bank, and Reliance collectively contributed around 133 points in the losses.   

On the Options’ front, 14,500 Put options have a total open interest of over 20 lakh with open interest addition of 8.59 lakh in today’s session itself. On the other hand, 14,800 Call options have seen open interest addition of nearly 27 lakh shares, taking the total open interest in this strike to nearly 38 lakh.   

Among the sectoral indices, Nifty IT emerged as the sole gainer as it was seen trading above 1.27 per cent while on the flipside, Nifty PSU Bank and Nifty Media were the top losers.   

Stock-specific action: Likhitha Infrastructure zoomed by over 10 per cent and marked a fresh all-time high. The stock has recorded the highest volume in the last five trading sessions on NSE.   

Cues from the global markets: Dow Jones Futures was up by 196 points or 0.59 per cent.   

Update: Monday is turning out to be a ‘Black Monday’ for the Indian benchmark indices with Nifty and Sensex losing 2.5 per cent as the rising Coronavirus cases have spooked investors.  

According to Worldometer, India’s daily COVID-19 cases rise by over 1 lakh, which is the highest-ever single day jump. Moreover, additional curbs implemented in the state of Maharashtra are a cause of concern. Nifty has slipped below the 14,500 mark while Sensex is hovering around the 48,700 mark.   

India VIX has jumped over 13 per cent and was trading above the 22.7 mark. Among the sectoral indices, barring Nifty IT, all other indices were trading in red with Nifty PSU Bank and Nifty Bank being the top losers.   

After recording back-to-back losses in the prior two weeks, Nifty saw a solid rebound and surged over 2 per cent in the truncated (last) week. However, helpful global cues and announcement from the US President Joe Biden about spending over USD 2 trillion on infrastructure supported the sentiments.   

Meanwhile, the broader market relatively outperformed the benchmark indices with Nifty Mid-cap and Small-cap adding 3.89 per cent and 3.76 per cent, respectively. On the sectoral front, Nifty Metals soared over 8 per cent on hopes that planned spending on US infrastructure would boost metals’ demand.   

Though the bulls have staged a smart comeback from the lower levels but in the last one and half months, Nifty stayed broadly in a range. And, recently, it has been developing range within the range. The broad range is 15,431.75-14,264.40 whereas the second range, which has been developed lately within the broad range is between 14,883 and 14,264.40. However, this broad range is proving to be very tricky for the majority of trend traders as they have suddenly witnessed the triggering of their stop-losses on both sides. However, one must understand that markets do not trend all the time; it trends only 30 per cent of the time.  

The index has closed above the 20 and 50-DMA and moreover, the 20 and 50-DMA are in the desired sequence, which is a positive sign. Having said, the real issue is that the price is stuck in a range, and on certain days, it closes above the 20 and 50-DMA, while on other days, it closes below both the averages. And this is the typical nature of markets when it has entered into a sideways phase, where price action often criss-crosses the moving average thereby, reducing its reliability. Hence, a close above the 20 and 50-DMA itself shall not be significant.   

 In the coming week, the level of 14,880-14,885 is likely to act as an immediate resistance and only a decisive close above this level could give confidence to bulls. On the downside, the gap area of the previous week is likely to act as a strong support area (14572.90-14,617.60).