USD-INR still hovering just below 80. Sooner or later it will cross and sustain above that magic number. On similar lines, 10 year old US bond rates increasing constantly signalling FED is doing quantitative tightening behind the scene.
US market is waiting for the Powell’s speech in FED symposium scheduled on 26-Aug. That may decide the next trend in US market at least. Popular expectation is that he will sound hawkish. US market is not going to give any decisive move before that and no favorable move after that.
In F&O space, FII, Pro, retail have all taken a bit of mixed position. Overall, market trend seems bullish and all intraday dips are being bought. A trend of late in the day bullishness can be observed.
In the cash segment, volume of trade is significantly reduced and probably, everyone is bit confused about next direction. When markets works on low volume, default is uptrend. Around monthly expiry, volatility anyway increases.
As anticipated in last blog, Nifty eventually gave an volatile inside day after good move of 23-Aug. 25-Aug being monthly expiry, it can be a big move day if there is a good amount of gap up or gap down.
Nifty option chain, shows good fresh call writing at every level above and including 17600. This is not so for put writing. So, apparently, a bearish move eventually may be on the card. But, a big gap up can turn it upside down. OI chain analysis can be done in live market using sites like tradingtick or opstra.
Market likely to open around 50-100 points gap up. If Nifty opens and sustains above 17720 then highly unlikely that it will come down during the day and we may see a highly bullish day. Any open below that will bring the market down during the day so that call writers can get a safe exit and overall market will end up giving a sideways move.
In case of a gap down, 17625 will act as a resistance throughout the day. Market will keep on showing lower levels during the day but positional short only below 17490.
Note that, our market is buy the dips style in near term, at least for next two months. There may be some temporary negative pressure in the last week of August and 1st week of September. Why our market is so bullish, it does not matter. Characteristics that market displays on the ground every day is more important than any known financial theory and its implications. At the end of the day, market behavior is made of up sentiments of traders/investors and not that of economists.