EquityCompound2

4th November' 2022 (Evening) -- | Written at 8.00 PM on 6th November' 2022 |

Publishing the notes after a gap today. So first sorry for that. Having a full time day job, brings its own set of challenges and sometimes, the work pressure makes it extremely difficult to squeeze time to analyze and publish the analysis.
I mentioned in the previous notes that a major resistance at 17900 will be breached and advised to watch the price action. The indices pleasantly obliged and have been holding strong at these levels.
On Friday also, made a strong bullish candle on the daily chart. It has also ended the weekly candle strong on a bullish note. is showing some exhaustion and is witnessing a brutal tug off war between bulls and bears.
We will discuss all this, but before that, levels...
From the levels above, 18200 seems to be a resistance level for and 41550 the resistance for . However, if we compare the range of first support to first resistance with the range of second support to second resistance, we see the gap is not much. This indicates a good consolidation in that range. So i would see this range as 17950 to 18200 on and 41050 to 41550 on .
I would watch a breach of this range on either side and expect a sharp movement in that direction. Till then the range above could hold, the option writing on Friday, does indicate a range bound action in this week. The range as above.
on Friday, bought for 1436 Cr in cash. This buying has been now a seventh straight day of buying from their side. With inching down and some green flavor across global markets, I see this as a good sign.
On the options side, the created a reasonable number of longs and shorts both on Index futures. they also sold a high number of puts and calls on Index futures. This kind of positioning on both sides, indicate their conviction on a range bound action (on Index) for this week.
as mentioned above has eased, though the US yields have inched slightly higher. India VIX has also eased, indicating some strength.
Options OI indicates support at 18000 for and 41500 for .
So all in all i see a base building up at 18000 and 41500. So i would maintain a bullish bias till the levels mentioned above are breached on either side. One may play this view as per their trading strategies and risk profile.
Economic events this week :
Mon - ECB president commentary
Tue - Indian markets closed
Wed - US Oil Inventories
Thu - US CPI and jobs data
Fri - British GDP and German CPI
Wish you all a happy trading week ahead....

28th October' 2022 (Evening) -- | Written at 9.30 PM on 30th October' 2022 |

The last month closed on a high note. Starting weak, the month of October saw decent gains and closed almost at month highs. Market was still strong and on the first day of the current series also, the indices were relatively strong.
made 4 consecutive bullish candles on the daily chart. made a bearish candle after 3 bullish candles, however still made a higher high and a higher low.
Levels :
Both and are in a range of 17650 to 17900 and 39825 to 41550 respectively. In this range saw some profit booking on Friday, while is yet to test the upper level.
I expected to test 17900 on Friday, however this did not happen. This may probably get breached in the opening tomorrow. Important to see is that will this trigger a profit booking and a rejection of the level or will the level hold.
On Friday, the first trading day of this series, created shorts on Index futures and also sold a high number of call on Index. However, on the other hand, bought in cash for 1568Cr.
The focus in cash seems to be on Index stocks. Market breadth on was strong, while on the wider market the breadth was extremely weak. So, I doubt if the levels would sustain. The US futures though may hold a cue to sustenance of levels.
has weakened for the past few days. It has eased to 100 levels from 114 earlier. It seems to be in sell on rise mode. The next key support is at 107.5 and will help provide important cues from there. The US yields are at 4.01 and seems stable there.
Options OI indicate a support at 17700 and 41000 for and respectively. On the higher side we need to watch the key levels as mentioned above.
India VIX has eased substantially and could well be a ey support indicator for .
key economic events this week :
Mon - Chinese Mfg PMI and European CPI.
Tue - Caixin Mfg PMI, British Mfg PMI, US Mfg PMI
Wed - German Mfg PMI, US Non farm employment data, FOMC statement and interest rate decision
Thu - British composite PMI, services PMI, BOE interest rate decision, US jobless claims and non mfg PMI
Fri - British construction PMI, US Non farm payrolls
Wish you a happy trading week ahead...

18th October' 2022 (Evening) -- | Written at 11.00 PM |

I mentioned in my last notes, in spite of the fall on Friday, US markets may drive a positive sentiment. This subject to the critical levels being held. I also suggested to watch this on the US futures. It was beautifully respected on Monday. Tuesday was a follow up.
Taking cues from the US action, today also went on a buying spree and see the result. The were forced to cover more shorts.- The larger question is, now what?
Before that, the levels :-
After the move on Monday, the Indian Indices opened gap up today and also traded in a range. While this forced the to cover shorts, we also saw some resistance at today's highs.
Both the Indices on the futures side, saw short covering. Fresh longs are yet to be seen. Also the Indices have left a gap, this needs to be plugged. Also after a strong move from Friday till Monday, some traders may like to book some profits. We may thus see a bit of consolidation and a small dip till the first support above.
However, the price action is strong and till the first supports are held, we may see some more bullish action. The charts actually indicate a move up to 17900 on and 41700 on are very much possible. Will they breach the levels and take it to new highs? I cannot say that as of now.
today sold for a small amount and unwound a large number of shorts on Index futures. They also closed long puts and short puts, indicating a cautious stand, fearing some more momentum. Also fearing a small dip maybe. Though they haven't turned bullish yet.
Dollar Index, US yields, Oil prices are all stable at current levels. So no cues need to be taken from there.
India VIX has eased and is a good sign.
Sectorally, i see some stocks in giving a breakout. Though still is cranky.
In the IT index, and seem to be strong, though is stronger. I see some runway for Infy. may consolidate here.
With a strong and , may well get the required support to touch the levels I mentioned above. As we saw some critical levels of and are held, This time US may not give a negative surprise for to shock.
Well as of now, i see the Indices set for a good Pre Diwali rally, though do not go overboard to make aggressive positions. keep the position size under control.

14th October' 2022 (Evening) -- | Written on 16th October' 2022 at 9.30 PM |

Last week was an interesting one. US saw a new level. Both and saw interestingly low levels. We will discuss this below...
On Friday, both and made strong bullish candles on the daily chart. However, the levels would be interesting to see :
Following the move on and on Thursday night, Our Indices made a strong rebound on Friday. The Indices opened with a huge bang, However, could not hold these levels. though could hold ground and kept its lows.
The Index futures positions also show a short covering on and long buildup on . This is good as is pulling some support.
As mentioned on my earlier notes, our Indices in near term are trying to take some cues from the US markets. So we may do this tomorrow as well. and both fell on Friday. However, I feel that in the current markets situation, some profit booking after a strong move on Thursday was very much probable.
Both and are at make break levels. A retracement of the move on Thursday is done and the Indices are close to important support. does seem to be pulling support, while seems to be a bit weak. if holds this level may make a double bottom and give some relief.
Opening of US futures tomorrow is crucial to watch. I would keep an eye especially on . 29600 is crucial level for it. has to respect its low on Friday, else the tech stocks could see a lot of pain.
continue to sell and have no hesitation buying. however, covered a lot of shorts on Index futures and stock futures. From the levels i see there is some scope for consolidation. The first supports are crucial and we may see some consolidation between the first support and first resistance for .
On the Options side the OI indicates support at 17200 and 39500 for and respectively.
stays where it was, however, the US 10 Year yields have inched higher. Oil stays close to 90 and all these do not seem to be influencing markets as of now.
Global economic indicators next week :
Tue - Chinese GDP and Industrial production. German economic sentiment.
Wed - British CPI, Euro CPI, US building permits,
Thu - Chinese PLR, US jobless claims and Housing sales
Fri - British retail sales
Wish you all a happy trading week ahead.

12th October' 2022 (Evening) -- | Written on 13th October' 2022 at 6.00 AM |

Markets today seemed to be coping strong as compared to the previous days. After opening flattish, the indices consolidated and made some gains through the day to close strong.
Both and made strong bullish candles on the daily chart, though these were still like inside candles as compared to the previous day. The levels now look like :
The consolidation yesterday helped elevate the first support a bit higher. While I do not hope so, watch for a breach of this support. If this support is held we may see some more buildup. A move towards the first resistance could very well be seen.
Being an expiry day today, watch for some sharp intraday moves as the previous days were volatile and may result into some expiry related adjustments.
yesterday did not sell much. Their selling was limited to 560Cr or so. They however, build some long positions in Index futures at the same time cut their call shorts and added put shorts, and this is a good sign. were relatively easy yesterday.
The Global markets action yesterday was muted with most of the markets in Asia and Europe closing in red. US markets closed flat yesterday and the US futures this morning are in green. This should help build the domestic sentiment.
While we have outperformed globally over the past few weeks and month. In near term, the market is trying to take some direction from the mother markets.
Dollar Index is in a range and the yields have inched slightly higher. The INR is also above 82 but not critical as a few days back. So i do not pick a near term cue from there as of now.
The options OI indicate some support building up at 17000 and 38500 for and respectively. These should hold today. If one is an expiry trader, having a bullish bias would help.
Not much for today.

11th October' 2022 (Evening) -- | Written on 11th October' 2022 at 11.00 PM |

Markets today opened flattish with in green and in red, made some gains and then eventually suffered a sharp sell off towards the end of the day. closed 1.5% in red and closed half a percent in red.
Both and made strong bearish candles on the daily chart. With actually making a bearish engulfing candle. Let us now look at levels :
As mentioned yesterday, the tussle between and is extremely strong. A strong selling by is been bought by the . This tussle is actually leading to ferocious movement of Indices in a range. Indices today again inched lower towards the lower end of this range.
sold for 4600 Cr today and bought for 2430Cr. I suspect this selling came towards the end of the day and probably also aggravated due to the Bank of England statement on UK financial stability.
A buying support did not come in at the first support levels of 17050 and the Index sinked deeper towards its next support. It now looks for support at 16850. I hope this support should come in for now, though a deeper cut cannot be ruled out.
also shorted the Index futures again and also covered the puts written by them. They however did not buy puts, this could be a sign that a deeper cut is not expected and we may see a recovery from this level. I would keep my hopes on a recovery.
The Dollar Index has eased a bit and no substantial change is seen in the US Yields. So they do not much influence the markets as of yet.
The rupee eased as well and this could be a positive for the Indian equity. Globally we remain a sweet spot with IMF forecasting India as the fastest growing economy globally. Though valuation vise we may be costlier than other economies, we may still be attractive.
The options OI indicate trouble with heavy call writing today. We may still probably see a bounce back till 17200 and 39000 on and respectively.
US markets are trading mixed with in green and mildly in red. If the closing in US remains strong, we may see a gap up opening tomorrow. keep an eye on the US close today and US futures tomorrow.

10th October' 2022 (Evening) -- | Written on 11th October' 2022 at 6.00 AM |

Following a sharp selling in US on Friday, our indices opened gap down yesterday. A gradual recovery was seen through the day, and the indices saw a close near the day highs.
Both and made strong bullish candles through the day, with small upper and lower shadows.
The levels indicated are as below :
As seen through past some days, a strong support comes in at lower levels of around16900 or so. Yesterday also the lower levels (17065) saw a strong buying from the and the indices recovered from there.
The continue to sell in cash. The selling from their side was again 2000Cr plus yesterday. The bough almost all of this. The determination from the side is high, to protect the bottom. The larger question that looms is how much more liquidity still remains on the institutional side.
While the eased a bit over the past few days, it saw some more strength over the last two days. This led to a sharp weakening of the INR. This probably supported the IT stocks. The IT stocks have lost more than 35% of the values from their highs and are heavily discounted at the moment.
IT stocks only need a visibility of business stability going forward. This would be sufficient to make them perform. Fearing a recession in US and Europe, these companies have to work hard for their top line itself. With results and a positive management commentary would be sufficient to give some momentum to these stocks.
The Banking stocks saw a huge momentum over the past days and have now taken a pause. The results season ahead will have to provide a strong reason for a further push.
I believe the markets are here to remain in a range, until a fresh reason evolves for them to breakout of this. This range currently seems to be 16750 to 17450 for and 37500 to 39500 for . A sharp move on either side can happen only one this range is broken.
The Options OI indicate a support at 17100 and a resistance at 17500 for and a support at 38700 and resistance at 39500 for . A wide trading range is indicated for .
Oil has globally again been trading around 97 Dollars and may remain so over there. The US Yields are also stable at 3.88 or so thereabout.
I personally feel that the markets would remain volatile, though a wide trading range is anticipated. If in cash, buying every dip could be a good strategy. If trading derivatives, be light in positions, need to be careful and remain hedged.
Keep watching the stocks, anticipate action there.

30th September' 2022 (Evening) -- | Written at 8.30 PM on 2nd October' 2022 |

On Friday a combination of Some supporting cues globally, an expected MPC outcome and oversold domestic markets led to a short squeeze resulting in and ending up 1.6% and 2.6% respectively.
Both and made bullish engulfing candles on the daily chart, an outcome of a spectacular one sided intraday rally. The levels now look something like below ..
Levels :
Starting from last week Monday, when the markets opened gap down, the Indices have been moving in a range. Friday literally covering all the losses from Monday till Thu.
I personally feel that the rally on Friday has confirmed two points. A conviction from the DII to buy the markets at 16800 or so and also that the range is here to play. A strong move will be seen only if this range is breached on either side.
This range seems to be 16725 to 17200 for and 37300 to 38825 for . A sharp move could be seen outside this range. While there is no reason to believe markets could give a sharp rise, there is also support coming in at lower levels. Also the Dollar Index has eased. So the range could be played till it breaches.
The rollover of positions from September series to October series was more or less 1:1 and this indicates a conviction from there side on a very limited upper side. Though the lower side needs to be watched.
have been selling again for some time and they have also entered the October series with a huge number of shorts on Index futures. I haven't seen this kind of shorts for quite some time. The are now 84% net short on futures. These shorts need a follow through and could send the market crashing down if they do. The on the other hand have been supporting and hence if they force the to cover the shorts, we could actually see a sharp short squeeze.
The above will keep the market volatile for some time.
The Dollar Index has eased to 112 levels and have to stabilize there is we expect some recovery in the equity markets. Oil price has also eased and this helps us. US yields have eased slightly as well.

The IT stocks have picked some support at lower levels and may be good buys for cash. Maruti also showed support at lower levels of the range. Though ay leveraged position in these stocks is not advised. For that matter actually, one should avoid leveraged trading as of now. Keep your positions light or properly hedged.
Both and closed lower on Friday and may lead to a gap down opening for us here in India. We need to watch the initial low being protected on Monday. If it does, it could well confirm a short term support at the levels and may give a reasonable risk reward in the current range. Though one should be extremely wary of the risk reward and should watch the price action carefully on Monday.
Global events this week :
Chinese markets closed for the whole week.
Mon - German, British and US Mfg PMI.
Tue - US jobs data and ECP president speech.
Wed - Indian markets closed, British composite and services PMI, US non farm employment and non mfg PMI
Thu - British construction PMI, US jobs data
Fri - Chinese Mfg PMI, US non farm payrolls and employment data.
Wish you a happy trading week ahead

27th September' 2022 (Evening) -- | Written at 6.00 AM on 28th Sep' 2022 |

Following some stability emerging in US on Mon, our Indices opened flattish on Tue, hoping for a recovery. However, after showing a flash of some green in the morning, the Indices could never capitalize on it through the day. While kept its ground, actually gave way and slipped to a negative close.
Both and made bearish candles on the daily chart. While was closer to the range of Monday, clearly made a candle with a lower low and a lower high compared to Monday.
Levels :
The levels above indicate a support coming in at 16900 levels for and 38150 for . Bulls yesterday defended their support at this level, While on this support may get tested soon.
It is extremely important for these levels to hold as they may other vise they trigger a deeper correction to the levels of Jun lows. While all this may not happen in one go.
In US there were some signs emerging yesterday of some support coming in, but the selling resumed fairly quickly and the indices lost ground again. This led to showing a sharp red opening today.
The US futures indicate some stability again today, so we may not open that bad as the was showing last night. I would watch the above levels in todays action, before any fresh change in view.
continue to sell in cash, They sold for 2800Cr again and created a huge number of fresh shorts on Index futures. Their positions on the options side were more or less same on call and put side. Though on Stock futures, they created longs and unwound a lot of shorts.
The options OI indicate support at 16900 and 38000 for and respectively, this is actually similar to the charts as well. Let us see today, if these levels are defended.
Dollar Index is at 114 plus now and is extremely strong causing ruckus in the global currency markets. With all major currencies globally falling, INR has been relatively stable. Though it is also now almost at 81.7 to a Dollar. Chances being that we may hit 82 to a Dollar.
The IT sector is gaining strength probably from currency. The INR depreciation may help the IT profitability. Though they still have to navigate to maintain their topline. With a steep correction from ATH, it actually gives an opportunity for some value buying. I have also put in some cash investments in the IT sector.
was going strong and some sharp move was expected, however, looks like the global selling has taken a toll on it as well. A sharp selling was seen from its multi year high lately. A good stock though and is a good buy now, till it holds 8560.
Oil continues to be at 85 USD and actually helps our markets. Though it continues to indicate growth concerns.
RBI MPC will declare its interest rate decision this week. Keep and eye on that on Friday. Before that the monthly closing on Thu will keep the markets volatile.

23rd September' 2022 (Evening) -- | Written at 4.00 PM on 25th September' 2022 |

After a relatively resilient first day, the second day turned out to be weak with people reluctant to put in money. The global weakness took its toll on us and a sharp selling was seen on Friday. There was no opportunity to by at any of the time intervals.
Both and made strong bearish candles on the daily chart. While closed staring at the 29th August Low the recent gains made by gives some space to from that low.
Levels as we see now :
As seen on the levels table above, we are now staring at the Aug lows and these levels have to hold, to prevent a deeper correction from these levels. We have been resilient recently, but then tiding against the winds for sustained periods may not be easy.
The US markets are now lower than the low they made on 13th Jun. This was the time when we made our low in Jun. If you have been reading my notes consistently, I mentioned a target of 29800 on and a target of 11000 on . These were hit and we coincided by our low of 15200 on and 32300 on .
Since then we outperformed the global markets by rising very close to all time highs, when the mother markets were struggling. The flight of global money and a huge buying interest from the domestic investors elevated the Indices.
The large question that faces is is do we align ourselves with the global markets or we stabilize earlier than them. Seeing that US markets have closed lower than the earlier lows, we have to watch for a recovery there, else the correction will definitely deepen there. In our case if we align with them, a deeper correction is possible, else difficult to say, where do we stop.
The INR has already breached the all time low and were are now sharply above 81 to a Dollar. The IT sector may face headwinds due to the slow down in US and Europe. Domestics facing stocks and the Banking stocks may remain strong with a rising rate scenario, though they have to tackle the problem of lower credit off takes.

Well these are fundamental thoughts, looking at all this only from a technical standpoint, please watch the levels above. Trade carefully and with strict stop losses. Sometimes leverages can be kept low and only cash investments make sense. I feel that buying the dips has always worked and deploying capital at a rate of 2% of ones capital for every 1% drop in the mother index from its ATH ( ) makes generic sense. One can consider this, till some stability arises.
Dollar Index is at 112.8 ( reasonably close to 114 its near term high) and needs to ease reasonably for a cool off. The comments from actually do not give this feeling. A sharp fall in Oil prices indicates serious concerns on growth and are the consequence of other factors.
A look at the options OI indicate a wider trading range. sees support only at 16800 and sees support at 39500. These seem kind of logical as well. While the levels above indicate some support at the first support levels, i feel any reasonable support will only come at the strong base. Watch this coming in before sticking ones neck out.
Global cues coming in tomorrow will be important as they would be watched by many across the world. Watch for futures opening tomorrow. a small support coming in US markets was seen towards the end. Will this resume on Monday should be seen.
Though in all this ruckus, is strong and is strong. The fall in these was very small compared to the larger selling seen.
Watch these events globally :
Mon - German GDP and business climate Index. Also ECB president speech
Tue - US Fed comments, Consumer confidence and home sales data
Wed - Fed chair speech
Thu - US GDP and jobless claims
Fri - Chines mfg PMI, India MPC outcome and rate decision, British GDP and US core PCE Index.
Last and important - monthly expiry for us.
Wish you all a happy trading week ahead....

22nd September' 2022 (Evening) -- | Written at 6.00 AM on 23rd September' 2022 |

Responding the the weak global cues on Thursday morning, The Indian markets feathered the storm well. When most of the global Indices were weak, we could come out without major breakdowns. The problem is not over though.
Both and opened gap down and struggled through the day. They both found support towards the lower end of the day range and faced pressure towards the higher end of the range. On the daily chart, They both made a candle with a decent upper and lower shadow, indicating the above behavior.
Levels :
I had mentioned earlier that the support levels are deeper and markets are expected to consolidate above these levels. This has coincided with the global ruckus and our Indices are now at these important levels. The risk reward becomes more favorable at 17425 and 40275 though.
Based only on price action, If a long trade is to be taken they can be taken at these levels with a risk reward as per Individuals taste. The Markets conditions globally will keep pressure on our Indices as well. Our resilience through the current conditions has been remarkable.
sold for 2000Cr plus on Thu and also created fresh shorts on Index futures. Their stance is bearish with most of the shorts that they had covered are now back again. The larger question is whether these shorts will now get a follow-through or they will be forced to cover again.
With Dollar Index at near 111 levels at a 20year high, Weakness of the INR against the Dollar will pose challenges. INR is already at close to 81 and this weakness is a strong indicator of the pressure on the equity.
The price action indicates the tug off war between the bulls and the bears and for further strength it is important for the markets to hold the above levels. I would observe the markets action before making fresh positions, though some long positions with strict stop losses can be considered with appropriate entries squeezed out from lower time frames and strict stop losses.
I believe and are extremely strong sectors and may add to this soon. However, , continue to drag. may remain under pressure due to the slowdown concerns in US and Europe.
as a stock seems strong and may give a very strong move after a breakout from the current range.
The Options OI indicate a strong resistance at 18000 for and 41000 for . call writing above 17700 on and 41000 on . These levels would play out as resistances. The wider range of writing yesterday indicate some volatility and lack of direction from the current levels. Being the last week of this series, this is natural, lets see...