How to position your trades today post exit polls and strong Q4 GDP data

Markets is expected to recoup last week's losses today

The stage appears to be set for a gap up opening for the Nifty on Monday, thanks to the double booster of a favourable exit poll forecast for the BJP, and the robust Q4 GDP data announced on Friday.

“Nifty could open at 23,100+ due to several positive factors," said Shilpa Rout, Head of Derivative Research at Prabhudas Lilladher, referring to the exit poll numbers, GDP data, timely arrival of monsoon, and strong GST collection numbers.

Record high soon

Besides the fundamental triggers, there are technical factors at play too.

“Foreign Portfolio Investors (FPIs) are short by 3 lakh contracts, an all-time high, while domestic long positions in Nifty too are at record highs," Rout said.

Chandan Taparia, Head of Derivative Research at Motilal Oswal Financial Services too is betting on the Nifty hitting a record high shortly.

“Nifty has formed a higher base, and volatility is likely to fall from peak levels,” Taparia said, adding that the index would open higher and manage to hit new lifetime highs soon."

Short Covering  

"FIIs positions indicate more players are short than long on the market,” said Ruchit Jain, Lead Researcher at 5paisa.com.

“Historical data shows similar positions on 22nd March 2023 (92% short positions), 29th September 2022 (87% short positions), and 16th June 2022 (88% short positions). On each of these occasions, FIIs had to cover their positions, leading to a Nifty rally surpassing previous highs and registering new highs," Jain said.

Also read: What-if Trading Plan: Santosh Pasi suggests a short iron condor option strategy if BJP-NDA gets 360+ seat

Jain noted that some of these positions might be hedges against portfolios, and covering these short positions could lead to a short-term uptrend. "Domestic participants' positions seem bullish, and any positive reaction to the results may fuel the rally," he added.

Key Nifty levels

Jain sees 23,000-23,100 followed by 23,400 as the key near term resistance levels.

On the downside, 22,400-22,300 is the immediate support zone followed by 22,000, according to Jain.

Nifty has retraced almost 0.5 percent from its recent high and has crucial support near the 22,400 zone, around the 50DMA level. On the upside, it faces hurdles at the 22,800 and 23,000 zones.

According to Shilpa Rout, these hurdles need to be breached for the trend to improve and confirm a breakout for a further fresh upward move to the 24,000 level.

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