The Tanmay Edge | India's pre-market edge, every trading day.
S2EP64 | Five Green Days, Then A Gap Down To 24000. Buy The Dip | 19th June Friday
Description
Five straight green days, and now a gap down to test it. The Nifty closed at 24,168, up 82, its fifth green day and its second close above 24,000, and the Sensex settled its weekly expiry at 77,409. But this morning GIFT Nifty is pointing to an open near 24,000, about 170 points lower, dropping us right back onto the support we only just cleared. There is no expiry today, so the open interest draws the day, and the question is simple, does 24,000 hold as support. The strange part is that the gap down is not coming from a weak Wall Street, it is the opposite. Overnight the US shook off the hawkish Federal Reserve and rallied, the Nasdaq up almost 2 percent, and Asia is firm this morning, South Korea up 2.3 percent. Brent crude sits near a three-month low at 79 dollars, gold got hit hard down to 4,185, and the rupee is steady and strong near 94.3. A friendly global tape and a soft local open at the same time tells you this is our own profit-taking after five up days, not a global risk-off, the kind of dip that gets bought if support holds. With no expiry, the open interest is the map. The put writers are stacked thickest at 24,000, fresh money defending the level that capped this market for five months and has now flipped to support. But just below it the support goes thin, 23,950 is a light shelf, and the real supports are not until 23,900 and 23,800. On the upside the heaviest calls sit at 24,500, the hard resistance, while the first seller is 24,200. The put-call ratio is 1.12. The straddle is about 226 points, an expected range of roughly 23,900 to 24,400. So the plan today is a buy-on-dips plan, not a chase. We open near 24,000, so the first job is to watch it hold. Buy the dip into 24,000, and even a wick toward 23,950 is a level to lean on as long as it snaps back. Keep the stop honest, a sustained break below 23,900 and the bounce is wrong, the next stop 23,800. On the upside, take-off toward 24,150 and then the first seller at 24,200, and only a break and hold above 24,200 reopens 24,500. The simpler trade is a caution about the calm. India VIX is back near 13 and option premium has been crushed, so it looks cheap. But there is no expiry crush to catch it today, and the moment 24,000 or 24,200 breaks the calm flips fast. Do not sell premium just because it looks cheap, and let 24,000 prove itself before chasing the opening move. The twist underneath is why we gap down. After three days of buying, the foreign desk flipped and sold 855 crore of cash, their first sell in four, and they are still net short about 2.21 lakh index futures. What held the market up was the domestic funds, who bought 3,130 crore and absorbed everything single-handedly. If the foreigners keep pressing, 24,000 is tested hard and 24,200 caps the upside. If that short gets squeezed, we snap back through. Episode 63 graded 4.5 out of 5, full scorecard on rupeecase.com [http://rupeecase.com]. Trade the level, not the opinion. Stream the full episode free and first on rupeecase.com [http://rupeecase.com], and on Apple Podcasts and Spotify, every trading morning at 8:30. Data: NSE, BSE, NSDL, US Federal Reserve.
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