FII F&O Analysis after Budget day Sell off

Highlights of Union Budget 2013-14

Union Budget 2013 was presented by FM Mr P Chidambaram, Lot of expectation was there from FM but he was unable to meet. It was a so-so budget but not a growth oriented one which market participants were looking for.

So what was the reason for Sell Off?

Devil was in the Budget Details

Tax Residency Certificate was necessary but no longer enough to Claim Benefits, under Double Taxation Avoidance Agreement.

The amendment is sparking fears that Tax Authorities would have wider discretion to go after FII who got benefited from Investing from countries like Mauritius to avoid Double Tax Avoidance treaties with India. Finance Minister to clarify on tax residency issue on Friday.

GDP data came worse than Expected, 4.5% VS 5.3%  Quarter on Quarter Basis , Market Expectation was between 4.9-5%, which will further boil down the sentiment.

Average Looses incurred by traders are in the range of 3-5 lakhs today, instead of repeated warning many traders have lost almost their whole trading capital. Suzlon was the biggest wealth destroyer today for most of retail investor, Pantaloon, ADAG stocks were the other stocks which have caused permanent damage to many traders and few of them will not be able to trade again.I always believe  “Learn and Trade“.

 

NS closed at 5693 after  making high of 5850 and low of 5672. Nifty has been falling relentlessly the whole Feb and ended the month with a cut of 5.7%.  As discussed yesterday Nifty did a swing of 168 points in today session and someone played out with Option Trading Strategy for Budget Day 2013 5800 CE and PE straddle would have ended up in 20-30% profit 🙂 . Yesterday we gave the range Nifty is sell on rise till 5858 is not broken, Today Nifty made high of 5850 before turning back :).

Resistance for Nifty has come up to 5738 and 5754  which needs to be watched closely ,Support now exists at 5672 and 5658.Trend is Sell on Rise till 5760  is not broken on closing basis.

Total Future & Option trading volume was highest ever at  4.02 lakh Cores, GOI was the biggest gainer today 🙂

FIIs for the first time seller of 1317 cores in 2013 once the fears of Mauritius tax treaty ignited again

Nifty Futures Trend Deciding level is 5736(For Intraday Traders), Trend Changer at 5781 NF(For Positional Traders). (Above this Level Bulls will rule Nifty/Below this levels Bears have upper hand). Bank Nifty Future Trend Changer Level 11791.

Buy above 5710 Tgt 5738,5754 and 5775

Sell below 5672 Tgt 5658,5635 and 5620(Nifty Spot Levels)

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