01Cold open: buy dips a third day, but keep the insurance on
On the screen yesterday looked calm. Nifty slipped two thirds of a percent, but 24,000 held to the tick for the second day running, and it closed 24,052, pinned right between the walls.
But the official positioning dropped last night and it tells a different story. The pros took money off the table, the foreign desks got more defensive, and the retail crowd piled in the other way.
So today I am still a buyer of dips, a third day on this wall. But that split under the surface is the exact reason you keep your insurance on. This is The Tanmay Edge, episode 81, a news podcast with a twist, options first.
02Yesterday the tape: crude ran past 86, but 24,000 held again
Crude was the whole story. Brent ran past 86 dollars on the Hormuz standoff and the market slipped with it. Nifty fell 159 points to 24,052, the Sensex fell 561 to 77,055. But 24,000 held to the tick again, the low was 24,023, and the close pinned between 24,000 and 24,100.
Under the hood it was defensive. Pharma, healthcare and metals were the only green, while realty, the public banks, autos and IT were sold. HCLTech alone fell four and a half percent after its result.
The foreign desks sold 740 crore in cash, the domestics bought 2,928 crore and soaked it up. And the fear gauge did not fall on expiry like it usually does. It rose, up three and a half percent to 13.75.
03Overnight: the tone improved, chips turned, crude stalled
In America a cooler inflation number lifted the market, the Nasdaq closed up 0.9 percent, tech back in front. Asia is green this morning.
Here is the one that matters for us. Taiwan's chips reversed and are up 1.8 percent, so the selling that hit our IT yesterday has turned. And crude, the risk, stopped climbing. Brent is 86, no fresh spike overnight.
GIFT Nifty is 24,046, flat to yesterday's close, so the open is quiet. The rupee is still soft at 96.20 and crude is still 86, so the tail is there, but it is not getting worse this morning.
04The twist: the official 14 July book
Here is the twist, and it is in the positioning that just came out, the official 14 July book. Pros move first. Going into Tuesday's expiry they were long both the calls and the puts, paying for a big move either way.
Overnight they cut it. Their long calls went from 1,52,000 contracts down to 48,000, and they trimmed the puts too. The smart desk that was betting on a move just took that bet off the table. They are still long the futures, but far lighter on the options.
05The participants: foreign desks defensive, the crowd chasing
The foreign desks went the other way, more defensive. They pushed their index futures short out to 2,65,000 contracts, added 44,000 more downside puts, and for the first time in this stretch they trimmed their single stock long book by about 82,000 contracts. Their whole derivative book reads bearish.
The clients did the opposite of both. They chased, adding a lakh of long calls, and sold even more downside. They are now short 6,29,000 puts under this market. That is the widest gap in a while. The money that matters stepped back, and the crowd stepped in.
06Why the hedge stays on: 24,000 is the fuel
So what does that tell you to do. This is a market to buy dips in, not to chase. And it is why the hedge stays on.
The crowd is short 6,29,000 puts sitting right at 24,000. That is the fuel. As long as 24,000 holds, those writers are fine and dips get bought. But if crude cracks that level, they all run for cover at once, and that is exactly what turns a slow drift into a fast drop.
07The levels: the Nifty board and tomorrow's Sensex expiry
On the new weekly board, 24,000 is the line, the single biggest cluster of bets on the screen, both sides. 24,100 is your first real resistance, the heaviest call wall at over 6 crore contracts. Above that 24,200, then 24,300, and the far wall at 24,500. Support below 24,000 is 23,900, then 23,800. The fear gauge at 13.75 is pricing a move of about 210 points today, so think 23,850 on the downside to 24,260 on the upside.
Tomorrow is Sensex expiry. The Sensex opens flat near 77,050. The sellers have stacked the top hard, 77,500 is the heaviest call wall, then 77,200 and 77,100 just under it, almost 12 million call contracts written there. 77,000 is the pivot, supports below are 76,900 then 76,500. The board is pricing 76,500 to 77,500 into the close.
The stance into Thursday. Fade rallies into 77,200 up toward 77,500 with a stop above, and buy dips to 77,000 that hold. Trade the two edges, skip the middle. One override, same as Tuesday, a fresh crude headline beats the pin.
08The plan and the scorecard: buyer above 24,000, out below on volume
The plan. Above 24,000 I am a buyer of dips with a hedge on. Reclaim 24,100 and I look for 24,150 to 24,200, and 24,300 only if 24,200 gives way. 24,000 is the line, hold it and dips are for buying, a third day in a row.
Lose 24,000 on real volume, and that needs crude to spike or a fresh headline over the strait, then gamma flips, the short put crowd runs, and I want no part of the middle. Next support 23,900, then 23,800, and I stand aside, I do not average down. Keep the insurance on. Vol is cheap, the fear gauge is rising, and there is a live crude event running.
Scorecard on episode 80. I said buy the 24,000 dip with a hedge and keep the insurance on. The tape fell as flagged, the hedge paid, and 24,000 held. But it held to the very tick, so the lower entry I wanted at 23,950 never came. Two and a half out of five, direction right, entry too greedy.