Trade setup for 20th October

It looks like the party is over and it's time for selling CE's. We had a good pre-diwali rally. The reason why I am saying that the party is over is that the $ is now at Rs 83. If this does not cool then banknifty will not rally. If banknifty does not contribute then it's difficult for the nifty to rally, unless some magic comes from IT. 

Yesterday, even Nasdaq has started to fall. Today Nasdaq futures are down by more than 1%. So it is unlikely that even IT will contribute. Yesterday there were Netflix earnings and it rallied more than 14%. Today Tesla numbers are out and it looks bad. In the after-market trades, it is down by 4%. 

17600 is the resistance for this month. If there is a breakout, then one can initiate longs else the markets may go lower or sideways. 

Yesterday, there was a rally in the nifty. Then in the second half, the rally was over as $ hit a new low. Yesterday, nifty went above 50dma and closed above it. It looks like there is no follow-through today. So that can be taken as a false breakout. So stay away from initiating longs for the time being.

Banknifty may come back to its 20DMA. So that will be strong support. I will look for opportunities to short banknifty if 20dma is taken out on lower side than buying the dip. Again, my view may change if there is any recovery in the $. 

Now RBI may intervene and sell $ to stabilize it. You never know what force will act and make an impact. So have a plan B ready as well.

It looks like, Reliance has began to rally. 2400 is  very very strong support. I will be selling 2200pe for next month. I am willing to take delivery if it goes lower.

Today you have bajfinace, asian paint, axisbank,colgate numbers.

Bajaj finance is in the range of 7000-7700 from august. If this range is taken out, one can follow that trend. The more it stays in this range, the more stronger will be the rally after breakout(if it happens). So wait patiently and keep an eye.


  1. My algo trade ended in red yesterday. But for the month, I am sitting with a profit of almost 6% which is good. 
  2. Today is expiry and I had sold a huge quantity of CE yesterday. It looks like, i will be in good profit for today. Since there is margin benefit which you will get. I will also be selling some deep OTM PE.
  3. I am executing the below earning trade for bajfinance in next series
    1. -1x7300ce
    2. -1X7300pe
  4. I don't think 17k will be taken out in this month. So I will execute the below trade in this month series
    1. +1 X17200pe
    2. -3 x 17000pe
  1. US markets have started to fall after a fantastic rally. Today the US futures are also in the red.
  2. Europe closed in the red
  3. Asian markets are down and out. Hangseng is down by 2%. SGX is down by 150 points.
  1. FII sold for 450cr and DII bought for 900cr
  1. $ is very important now. Keep a close eye on this. It is at Rs 83
  2. Crude is at $92