Dear Trader…
Nifty future managed to register a new all time high at 14903.90 as governments around the world looked poised to boost spending to help economies recover from the corona virus and vaccine roll-out programmers accelerated. European equities were on track for a third consecutive daily rise, while Italian assets rallied, as hopes that former European Central Bank chief Mario Draghi can bring political stability to Rome added to the positive mood.
A gauge of India’s services sector remained steady in January, helped by new businesses. The India Services Business Activity Index, compiled by IHS Market, stood at 52.8 in January 2021 compared with 52.3 in December.
Market maintained their upward momentum after growth oriented budget delivered by the Finance Minister Nirmala Sitharaman on Feb 03, though it retreated from the highs towards the end. This raises the possibility of a bullish technical count, especially if it does not correct sharply on the succeeding day.
The open interest in the Nifty has declined compared to the last month at inception. The February series is starting with open interest close to 9.6 million against 11.8 million shares seen in the last series. However, the roll spread has come under pressure as expected.
FII’s were Sellers in Index Futures to the tune of 975 crores and were Buyers in Index Options to the tune of 3562 crores, Sellers in the Stock Futures to the tune of 921 crores. Net Buyers in derivative segment to the tune of 1517 crores. India VIX index is at 23.32 v/s 25.34.Nifty ATM call option IV is currently 23.49 whereas Nifty ATM put option IV is quoting at 22.03.The Composite PMI Output Index raised to 55.8 in January from 54.9 in December.
The sentiments were under pressure with Reserve Bank’s data showing that overseas investment by domestic firms fell by over 42 per cent to $1.45 billion in December 2020. In the year-ago period, companies in India had invested $2.51 billion in their foreign firms (joint ventures / wholly-owned units).
Traders failed to get any solace with International Monetary Fund’s (IMF) projecting that India will reclaim the status of world’s fastest-growing economy and projected its growth at 11.5 per cent in 2021 and India is rebounding to achieve the target of a $5 trillion economy.
We expect the market to continue with its bull run to hit fresh high, although we expect some correction after each rally. We advise investors to use correction in the market as an opportunity to buy, on the other hand, traders should maintain extra caution due to the expected rise in volatility ahead.
The trend deciding is 14878. If NIFTY future trades above this level then we may witness a further rally up to 14909 – 14930 levels. However, if NIFTY future trades below 14777 levels then we may see some profit booking initiating in the market, which may correct up to 14707 – 14676 levels.
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