Nifty crashed more than 200 points on the back of weak US Markets and poor projection of BJP performance in the State Assembly Elections as per various Exit Polls.
At the close of day the thoughts were mixed. Markets had a bad day. Now it is time for reality. Results will be out tomorrow. If BJP does better than what the exit polls suggest, there maybe an equally sharp recovery.
But bad news never comes alone.
As if the market did not have already enough on its plate, we got the news that RBI Governor Urjit Patel resigned.
On cue, SGX NIFTY tanked.
Before we talk of what to expect this morning, let us review how the 200 point fall worked for us.
SUNPHARMA, TATAMOTORS and RELCAPITAL made fresh 52 week lows. These three stocks are doing this with some regularity this month and we expect the trend to continue. We have already moved to lower Strike Price in SUNPHARMA and similar action is to be taken in other options too at appropriate time.
On Friday, VEDL PUT 185 trade was taken at Rs. 4.00 which was not included in the weekend review post. That status is now corrected.
It looked like that RELINFRA trade will not materialize. But the stock moved up and it was possible to get it at Rs. 8.00.
This is the current status:
Picture looks good. The main concern is that it should continue to look good and get better. We do not know what is in store for us. The suspense of election results is too much for those whose fate is going to be decided. For us too it matters a lot.
Combined with the International Trends, resignation of RBI Governor, a BJP loss in Rajasthan, Madhya Pradesh and Chhatisgarh ( if it turns out this way) will be a very heady cocktail for a strong down move similar to the one we saw on September 21, 2018.
If the results are favorable to BJP i.e they win two out of these three states, we may see NIFTY recover sharply.
As of 8:30 am, SGX NIFTY is down 160 points while Asia Markets are flat. US markets too were flat. So it is all about the election results now.
Turbulent times, volatile trades, an option buyers dream come true or the worst nightmare.
The day is about to unfold.
Tighten your seat belts and enjoy the roller coaster ride. It is certainly not for the squeamish. Stay alert, stay cautious. There is reason to be concerned if the trades start going wrong. Again there is reason not to panic because we still have 11 more trading days left in this month.
Such days are the true test of a trader’s acumen. We shall see how many of us pass this test today.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.