Day trading guide for Monday’s session

Chandan TapariaThe Nifty index make a gap-up opening in line with positive global cues and continued its upstream towards a new life-time high of 14,367. It escalated throughout the day and buying-interest was seen across the Street as any small decline was being bought. The last hour of the session saw a rally fueled by the bulls and the session ended with decent gains of around 1.5 per cent. It formed a healthy bullish candle on daily and weekly charts, along with higher highs from the last 12 trading sessions. Now, the index has to continue to hold above the 14,200 mark to make a fresh move towards the 14,500 zone. Major support exists at 14,100-14,000 levels on the downside.

Derivatives


The India VIX index was up a marginal 0.10 per cent, from 20.62 to 20.64 levels. Volatility needs to cool down below the 20 zone to support the bullish market setup and fuel the next rally with a higher market base. The Bank Nifty index also made a gap-up opening near 32,300 but could not sustain at higher levels, and slipped. It formed a bearish candle on the daily scale as it closed lower than its opening levels. However, it continues its higher highs from the last five trading sessions. Now, it has to continue to hold above the 31,750 levels to make an upmove towards the 32,500-32613 zone. Support exists at 31,500 and 31,200 zones on the downside.

NIFTY options strategy


Bull Call spread: 14,350 CE – 14,500 CE (January 14th, weekly expiry)

Buy 1 lot of 14,350 Call @ 109

Sell 1 lot of 14,500 Call @ 42

Net premium paid: 67 points

Keep a stop loss of net premium of 25 points: Risk of 42 points

Keep a target price of net premium of 140 points: Reward of 73 points

Rationale The Nifty index has been witnessing buying interest at every small decline and heading towards a new life-time high territory.

The India VIX index has risen marginally but indicates a tight bull grip in the market.

The Pu-Call ratio has increased with Put writing at immediate strikes.


Forex Technical


Kishore Narne, head – currency and commodities, MOFSL:


USD/INR Status: A sideways-to-lower move looks possible for the pair in the short term.

CMP: 73.40
Target: 72.85
Stop loss: 73.95
Trade: The short-term trend looks bearish as long as the pair is trading below the resistance of 73.95….