Trade setup for 29th November



 Now the new variant of covid called Omicron has become a concern for many countries. Many European countries have gone for a lockdown. The NY state in America has issued fresh restrictions. It looks like there will be curbs for Christmas and new year celebrations. This will be the 2nd year where the celebration related business during new year will be impacted.

India has issued a red alert for this new mutant. Strict monitoring is happening at state and international borders. The problem is that this variant has the capacity to bypass the vaccine also it seems as per experts which is a cause of worry.

As the news broke out, there was uncertainty in the market and markets collapsed on Friday. Nifty fell 500 points and banknifty fell 1300+ points. There was no support at all in the market. Even 17000 was broken. Still, markets have not fallen 10% from their highs, so it is still considered as a correction. Today's trading will be very important. If 17k is broken convincingly then we may go to 16500. The main problem is that the FII are selling like anything. I am expecting nifty to get below 16500 by this year. This is now a sell on rally markets. You can use every rise to get short on the markets as there is no major known news that can turn the markets unless FII changes their mind. 

This was all the bad news. Now the good news for markets is that Moderna has promised an updated vaccine in 100 days. Reliance jio has hiked prices. Not sure if this good news is really good for the markets to recover. Markets will not crash twice for the same reason but this time it can be an exception also. So don't expect markets to go to 8k, 7k etc which may not happen. 

Handing over markets to retailers near an all-time high is definitely not a good idea. Ultimately retailers are going to screw things.

I would recommend everyone to use this opportunity to begin investing in quality stocks. The markets may fall more or may recover. Nobody knows that. But, start investing in phases and gradually you will get the benefit over the long run. As I told you before, I had sold all my equity holding when nifty was at 18k. Now all the stocks which I had sold are way below my sell price. I will begin investing in nifty50 stocks gradually in a phased manner. This is exactly what I have been doing whenever there is a major fall and I hedge that in options. Keep it simple. Dont overcomplicate things. Now you can invest 5% of your capital and add 5% for every 500 point fall in the nifty.

As the uncertainty in covid increases, even China's real estate uncertainty also increases. Markets like bad news and they like good news but they don't like uncertain news.

Now the inflation is also seen. If this variant becomes dominant then we need to see how will FED tackle this, because increasing rates may not be a viable solution as they have provided a lot and providing more liquidity also will not be a solution as inflation will spike. It's really a confusing state of the FED.

The US markets as expected fell. Dow lost almost 1000 points. This is the single biggest fall in recent times. Today the US futures are in the green. Let's see if there will be a recovery or will there be follow-through selling.

MY TRADES

  1. I have sold PE of many stocks like ICICI bank, bajfin, Reliance. I will take delivery if it becomes ITM. 
  2. I thought of doing a live butterfly trade for my students on Friday, but the markets fall continued and I waited for it to settle which did not happen. I executed a few legs of the butterfly and did not hedge. Today if markets settle and when vix falls slightly, I will be adding some legs.
  3. Today I will be executing the below strategy in RIL
    1. +1 X 2400pe
    2. -5X 2300pe
INTERNATIONAL MARKETS
  1. US markets fell 2%. But today the futures are stable and there seems to be some recovery.
  2. Europe fell 3-5%
  3. Today the Asian markets are flat to positive. SGX is suggesting a 100 point in the green.
  4. Japan which opened in the red has now moved to the green.
CRUDE AND $
  1. Crude is now at $75. It bounced more than 4% after there was uncertainity.
  2. $ is at Rs 74.9
FII AND DII
  1. They are just selling every opportunity which they are getting. They have sold for more than 5k on Friday and DII bought for only 2k.
  2. In march 2020 FII sold for 65kcr. Oct 2021 they sold for 25kcr and in nov 2021 they have sold for 31kcr.





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