MACRO HEADWINDS TODAY
Dollar Index shoots up to 112.1 from 110.3
Dollar-Rupee indicating 82.25 in forward mkt
World Bank cuts India’s growth forecast
Brent crude at 94.5, above 96 will be in bull mkt
If the trend is up, negative news will be bought

TRADE SETUP
FIIs at 20% long and 80% short in Index
Heavy Call build-up at 17,400 and 17,500
Nifty is in a very strong congestion zone
17,400-17,500 is a big resistance level for Nifty
17,472 is the current 20 DMA for Nifty
Bank Nifty may test 50 DMA of 39,045
Below 50 DMA, support comes at 50 DEMA of 38,650
Midcaps to outperform till Nifty above 17,200

Good morning

TRADE SETUP
Big question: Why are FIIs shorting so much?
Index futures: FIIs add 15,000 fresh shorts
FIIs shorts back to near record high of 1.1 lakh
FIIs are 18% long and 82% short on Index
Market’s theme will be centered around FII shorts
Above 17,500 big covering, below 16,800 big decline

NIFTY SETUP
Yesterday’s low of 17,064 first support
16,818 remains most important level on close
17,400-17,500 biggest congestion zone
Close above 17,500 will lead to massive covering
Close below 16,800 will lead to bigger decline

BANK NIFTY SETUP
Bank Nifty turned right from the crucial support
38,500 now most important level to defend on downside
Yesterday’s high of 39,315 will be first resistance
Above 39,315, level to watch is 20 DMA of 39,715

IT: WHAT NEXT?
All IT ADRs up 2-3%
IT stocks may bottom out for now
Biggest positive in TCS is the margin picture
Going forward, US economic data will be crucial
Inflation or recession: What’s going to happen in US?

And now the most important data point

RETAIL VS FII
FIIs at record short, retail at record long
Retail long in Index futures highest at 1.56 lk
Last time this happened was in June
Nifty rallied 15% from June lows
Retail has won 3 out of 3 times vs FIIs in such setup

The big talking point of the day

Good morning

Detailed setup

TRADE SETUP
Market now in oversold territory
Put Call ratio, FII stats in oversold zone
First rally can be sold into today due to sentiment
IT’s selling yesterday despite TCS nos was brutal

NIFTY SETUP
Nifty closed at 200 DMA, third test of 200 DMA
Anecdotally, third test of 200 DMA breaches it
On closing, 16,818 now becomes sacrosanct
Below 16,818, Nifty would mark a lower low
Break of 16,818 opens door to 16,450
On upside, strength returns only on close above 17,350

BANK NIFTY SETUP
Bank Nifty showing signs of giving up outperformance
No major Put build-up till 38,000
First major support for Bank Nifty at 38,500
Aggressive Call build-up at 39,500 and 39,000
Keep an eye on ICICI Bank and SBI

Good morning

FRIDAY CHEER
US markets rally big despite hot inflation
Relief rally plays out after event is over
Bulls betting that inflation high but has peaked
Back home, markets halted at major support
Infosys posts best in class numbers
Big short covering expected today

GLOBAL CUES
US Bond yields, Dollar little changed
Market positioning was very bearish
S&P 500 bounced from exact 52-week low
Basic structure of US market is weak
For India, Dollar,Crude and bond yield important
((IMF))

TRADE SETUP
FII Net Sell 1,636.43 Cr in Cash
DII Net Buy 753.29 Cr in Cash

FII in FNO
On Index Futures
Longs -259
Shorts + 6183

Positioning on Index Futures
Longs 19%
Shorts 81%

Nifty PCR at 1.06 vs 0.95

NIFTY SETUP
Nifty again protected 200 DMA on close
SGX Nifty indicating 250 point gap up
For today, don’t even think about shorting
Markets might have a massive short covering day
Possible to see Nifty test 17,400-17,500 today itself
Market extremely short, will trap Call writers
17000 Call added 32 lakh shares, prem Rs 200
17200 Call added 19 lakh shares, prem Rs 100
Above 17,325, major resistance only at 17,500

BANK NIFTY SETUP
Once again, Bank Nifty didn’t break 38,500
38,500 will be now a base for Bank Nifty
Bank Nifty may see a 1000 point rally today
Possible to see Bank Nifty cross 39,500 today