The F&O Show: Market Extends Losses Ahead Of Oct Expiry
-#Nifty breaches mark 19,000 for the first time since June 28
-Nifty & #NiftyBank F&O expiry today; What should investors do?
In conversation with InvestMentor Securities’ Jay Patel. #BQLive
-Nifty & #NiftyBank F&O expiry today; What should investors do?
In conversation with InvestMentor Securities’ Jay Patel. #BQLive
Transcript
00:00 Hello and welcome. This is BQ Prime. I am Agam Vakil and you are watching the FNO Show,
00:04 a show in which we talk about futures and options, specifically in the Indian derivatives
00:09 markets. Well, what's happening right now at the moment is a little bit of capitulation.
00:14 While Monday had warning bells, on Wednesday, we did have the markets come off. And today
00:21 is when we are seeing further precipitation when it comes to the falling markets. So both
00:26 the Nifty and the Bank Nifty under further pressure. In fact, the Nifty has lost out
00:31 on the 19,000 mark at the moment. And we're looking at significant weakness here as well,
00:38 with substantial shorts building into the system. Do remember that today is not only
00:43 the weekly but also the monthly expiry. So options as well as your monthly futures expire
00:49 today, which is why we'll have a lot more attraction. And perhaps that is the reason
00:53 why, you know, 19,000 and 18,900 on the Nifty will also be important going into the next
01:00 one week and the next one month in terms of new series. That said, coming down to the
01:06 Bank Nifty too, for now, at least we are seeing once again a lot of weakness and the Bank
01:11 Nifty has also very decisively broken below 42,500. Do remember that just a couple of
01:19 days ago, we were actually talking about 43,500, which seemed to be a little bit of a pivot
01:25 over the last five odd months. We are well away from that mark, in fact, and now we are
01:30 in very, very well below the 42,500 mark as well. The question really is that how much
01:37 longer can this weakness sustain? And should we see some sort of a shortcoming rally? When
01:46 can that come through? Well, to take us through all of this, well, we have with us Jay Patel.
01:52 He is the Technical Analyst and Derivatives Research Head at Investmenter Securities.
01:57 Jay, good morning and thank you so much for joining in. Why don't you talk to us about
02:03 what you see as far as the markets are concerned and perhaps specifically the Nifty. How are
02:09 you assessing this? So good morning, Aram and good morning to all the viewers. Particularly
02:15 for Nifty, I guess we have already seen a massive breakdown since this week. Nifty is
02:21 down more than 8% in 45 days. So particularly this would be a good buying opportunity as
02:27 Nifty is approaching near its 200-day exponential moving average that is placed around 18,830
02:33 levels. So I guess the downside is limited from this point. But if we are looking to
02:40 buy for the future or for the coming months, this will be a good opportunity to accumulate
02:45 the blue chip company stocks or even the mid-cap stocks. So I guess if we talk about Nifty,
02:50 so today, if we take out today's expiry, then from tomorrow onwards for the fresh November's
02:56 expiry, I guess Nifty would be approaching a better mark, crossing above 19,000 would
03:02 be very crucial in today's trade. Also in the coming expiry that is at around 2nd of
03:07 November. So 19,050 is a good crucial level for the resistance for the traders, particularly
03:13 after today's market downfall of more than 1%. But today, if you look at the support
03:18 level, 18,830 would be a very good support zone and traders or even the swing traders
03:25 can accumulate Nifty or start buying on Nifty at these levels. So 200-day exponential moving
03:34 average would be a crucial support in today's trade or tomorrow's trade.
03:39 So based on that, Jai, how are you playing options on the Nifty?
03:46 So if we look at the expiry for the 2nd November, I would suggest buying a short strangle, particularly
03:53 on Nifty because Nifty would trade in a range in coming weeks. So if we look at buying around
04:00 Nifty 18,800 put option, we can sell 18,800 put option for the 2nd November expiry and
04:09 we can also sell 19,200 call option for the 2nd November. But the premium received would
04:17 be your profit and I guess that Nifty would be trading in range bound till 2nd of November
04:24 because of geopolitical tensions, rising bond yields, rising crude prices and also rising
04:30 dollar index. So I guess Nifty won't fall much from here, but the upside range is also
04:36 limited till 90,200. So the range would be better for the next week.
04:41 Okay. So, well, we watch out for that. Of course, Jai is recommending selling a strangle
04:46 that is selling the 19,200 call and the 18,800 put if I'm not mistaken. And of course, this
04:57 is on the expectations that there will be some amount of range bound trade going into
05:01 the next week. But Jai, can we move on and talk a little bit about the Bank Nifty as
05:06 well? Before that, very quickly, as I've mentioned, we are seeing more and more activity, in fact,
05:11 a lot more writing, at least in today's day of trade, given today's weekly expiry, monthly
05:17 expiry, we are looking at a lot more writing around the 42,500 call. Now, until a few days
05:23 ago, this was actually a support. Now, but perhaps in today's day of trade, it may actually
05:28 act as a resistance. But Jai, coming down to you, what is your assessment on the Bank
05:33 Nifty? You can give us your intraday view as well as your positional view. What's the
05:38 way forward here? So definitely, Bank Nifty is always a surprising factor for the market
05:44 because if we look at 42,500 on yesterday's trade, it was a good support zone. And today,
05:50 it has broken more than 500 points at the downside. The crucial psychological support
05:55 and even the option of open interest support, 42,500 has already been broken. 200 day moving
06:02 average has been broken down on the Bank Nifty daily chart. So I guess if you're looking
06:07 for today's trade, I guess 42,000, 250 would be a good support in today's trade. And if
06:13 you're looking for an expiry for 2nd November, sorry, 1st November, that is on Bank Nifty
06:20 expiry. So I guess 42,100 would be a good support zone going further. I don't think
06:26 Bank Nifty could rise potentially because of rising bond yields and pressure from geopolitical,
06:33 particularly America. Even the 1st November, they have, the J&P would be announcing the
06:39 interest rates. So the 1st November expiry would be very volatile for the Bank Nifty.
06:43 So I guess today's trade, we can look at buying Bank Nifty for intraday perspective because
06:50 it is trading at a good support zone, particularly after Bank Nifty reaches to 42,250, it would
06:57 be a good buying zone in today's trade. Okay. Now that we've spoken about the two key indices,
07:03 let's also address as to what's happening in the stock futures and stock options space.
07:10 So let's very quickly talk about all the stocks which are in fact dragging down the indices.
07:16 TechMinder of course is reacting to earnings, a weak set of operating profit numbers coming
07:22 in there and perhaps taken, a lot of traders are taken by surprise. A lot of market participants
07:27 are taken by surprise. So we've seen shorts building in there. We have Bajaj Finance,
07:33 SBI which is perhaps weighing down on the Finn Nifty. And of course, HDFC Bank along
07:39 with ICICI Bank are the two relatively heavier banks. Of course, not to forget SBI as well,
07:45 which are weighing down on the Bank Nifty in general as a whole. We're seeing some amount
07:50 of shorts building in there as well. We have to watch out for the rollover data at the
07:56 end of the day to determine as to what extent has this been towards the short side. In terms
08:03 of gainers, we don't really have too much. Well, it is a surprising one, but Axis Bank
08:08 is in fact up 1%. So that is actually the one which is moving contrary to the rest of
08:13 the banking space and advancing in today's trade as against declines. But that gain is
08:18 also 1%. So not too many stocks in favor of keeping a check as far as the benchmarks decline.
08:26 But coming back to you, Jai, you have two ideas on stocks. Can you take us through those?
08:31 So definitely, the first would be a buy call on Reliance Industries for the November month.
08:39 So November future, Reliance would be a buying opportunity. I guess Reliance has already
08:43 taken a big downfall from around 2600 levels. And currently we are seeing Reliance trading
08:50 at support zone. The two years written for the Reliance is almost nil if you compare
08:55 to two years written. So I guess the support would be strong at around 2180. So that would
08:59 be a stop loss for us in Reliance, that is November future. And if we look at the target
09:05 price, the target price would be around 2345-2350 zone. So because of the previous consolidating
09:14 range or even if we talk about 200 exponential moving average, we can see the stock rising
09:19 towards that and the target would be placed at around that level, that is 2350. So the
09:26 first would be a buy call on Reliance in November future. And the second would be a sell call
09:30 on Hindustan Copper November future. So if we talk about Hindustan Copper, it has shown
09:38 a massive breakdown, particularly after forming the double top pattern in the daily chart.
09:44 Also we saw a downward sloping trend line in Hindustan Copper and today, in today's
09:49 trade it has broken below its 100-day exponential moving average. Thereby we can expect the
09:54 stock to reach the target of around 132, that is 200 exponential moving average. So the
10:02 range is very clear. The downside would be till to the 132 level, that would be our target
10:08 on the sell side. And on the stop loss side, 130-140 zones would be a stop loss for this
10:14 stock. So I guess Hindustan Copper would be a good selling opportunity if we see a metal
10:20 sector downfall coming in months. So Hindustan Copper would be a sell call and buy call would
10:26 be on Reliance.
10:27 Okay, so those are two ideas from the stock futures and options space coming in from Jay
10:33 Patel. Well, for now, of course, the markets are not looking at their best. It seems that
10:39 we have arrested the intraday decline, at least for now. Over the last 15-20 odd minutes,
10:46 both the Nifty and the Bank Nifty are starting to sway sideways. But the Nifty is testing
10:53 18900 at the moment. And as I mentioned earlier, the Bank Nifty decisively below the mark of
11:00 42500. We'll be watching out for some of these skews. Also, a lot of these skews that Jay
11:05 has mentioned for not only in trade today, but also going forward. Jay Patel, we'll leave
11:11 it at that. Thank you so much for joining in and taking us through your views on the
11:15 markets. And on that note, we sign out for now. But there's lots more lined up. Don't
11:20 go anywhere. Stay tuned to BQ Prime.
11:22 Thanks, Jay.
11:31 Thanks, everyone.
11:38 [BLANK_AUDIO]