EquityCompound2

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.

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