Short Market Report 01.02.22

Short Market Report

Shortest budget announcement with not so much of bad stuff has been received well by markets if we let go of the huge sell off that happened in between. Nifty and Bank Nifty posted almost a hanging man candle which has its own bearish implications but the lower wick is so long that it indicates significant buying pressure on every dip. That is the reason I am having a bullish conviction. Buy Zones are 17450 and 37800.

There seems to be a highway till we reach 17800/18000 and 39000 in Nifty and Bank Nifty respectively (resistance zones). Also huge shorts have been added at 17500 and 38000 which again supports the bullish bias.

Also daily RSI is maintaining above 50 in both cases.

What can happen tomorrow? A gap up opening may be on the cards. If we move too fast towards resistance zones may trigger a heavy sell off. Not expecting a red day but all depends on volatility. Trading indices has become a dangerous business when Nifty can fall 400 points and Bank Nifty can fall 1200 points in a matter of few minutes and then have a stupendous recovery. These are the typical so called liquidation candles where market makers generate enough liquidity to enter large positions.

17500 short straddle is being played in Nifty but if moves up too fast may lead to short covering. So, not necessarily expiry will happen around that level.

Trading Ideas: Carrying long positions have been suggested in both groups. Option selling is more favourable as Vix is dropping which eats away option premiums in a jiffy.

Nifty & Bank Nifty

Bias & Conviction bullish