Mentoring Session 8,

Intraday Trading and World Markets

World Markets

Trading is all about “Connecting the Dots” to interpret the market sentiment and putting that
analysis to action. Trading in the markets is all about looking at various market influencing
factors that we refer as “Dots” and analyzing them collectively.
So there are about 10 Dots that we suggest a Professional Trader must look at before taking a
trade. (Don't get disheartened by reading the number 10, your mind is capable of analyzing
much more than that, it just needs to be trained). The first Connecting Dot is of World Markets.
We will learn important aspects about World Markets by trying to answer these questions

1. Why are World Markets important for Indian Markets?

2. Which World Markets have significant influence on our Market?
3. Which is the most important global economy for Indian Markets?
4. Which Global Indices do we need to track?
5. How can we track the World markets?
6. Is there any specific time period when Global Markets become less significant for Indian
Markets?
7. Relevance of SGX Nifty.
8. Can Banknifty and Dow Jones be related to each other?

So let's begin!

1. Why are World Markets important for Indian Markets?

In this era of Globalization everything is connected. Trade, business and commerce has
actually eroded political borders between nations and continents. Our markets get a
substantial amount of capital from overseas investors and institutions. Also overseas
markets get a significant amount of capital from Indian HNI’s and institutions. In such a
scenario if anything happens in one part of the World will have ramifications across the
globe.
Lehman brother crisis, Dotcom bubble burst are historical examples to prove our point.
2. Which World Markets have significant influence on our Market?
Though there are more than 200 countries across the globe, we don't need to give
importance to all of them. We need to look at two sets of economies
● Developed Economies: US, UK, Germany, France, Japan
● Emerging Economies: Asian Economies like Hongkong, Indonesia,Singapore
Tracking these economies is more than sufficient to analyze World Markets.

3. Which is the most important global economy for Indian Markets?

Of all the global economies the US economy is most important for our markets. The
primary reason for this is the “Dollar” that is the international currency. Since the majority
of the global trade and financial investments happen in dollar terms, the US becomes
the most important economy. It is for this reason that the US Market usually represented
by US 30 or Dow Jones is considered to be the mother of all economies.

4. Which Global Indices do we need to track?

We need to track following Indices on live basis
1. Dow Jones: Index of Top 30 US companies. Since it is traded in the US the
timings of Dow Jones do not match with our Markets. It is traded from 19.30 Hrs
to 01.30 Hrs as per IST.
2. US 30 Futures: This is a tradable instrument and is traded from 5.30 Hrs till
01.30 hrs as per IST.
It is important to analyze both the Dow Jones (Spot) and US 30 (Future) together
to form a view.
Just go throught the following hypothetical example of how changes in US
indices can be interpreted for Indian Markets before our Markets open.

S.no Change in Dow Change in US 30 Interpretation

Jones (Spot) (Futures) till 09.00

1 +100 +50 Bullish

2 +100 -75 Neutral

3 -100 +75 Neutral

 4 -100 -50 Bearish
Though this is an oversimplification of facts, you must understand the concept and apply
it yourself in the real world market.

3. HANGSENG: HongKong. This index is second most important for Indian markets
in the opening hours. The reason is that Hongkong, like us, is an Emerging
economy and Global Investors for most of the time pump/extract money into
Emerging markets as a group. So whatever happens in the morning in Hansang
before our market opens can be a good indicator for our market.
4. NIKKEI: It is the benchmark index of the Japanese economy and is the earliest to
open as per IST. It trades from 5.30 AM in the morning.
5. DAX : Germany
6. FTSE 100 : United Kingdom
7. CAC 40 : France

5. How can we track the World markets?

These Global markets may be tracked on a Live basis on various websites like
Investing.com or Bloomberg.
OI Pulse’s Dashboard allows you to keep a track of US 30 Futures on a live basis.

6. Is there any specific time period when Global Markets become less significant for
Indian Markets?
This is a very important aspect to understand. Though for most of the times we will move
along with the Global markets but there would be times when we shall be highly
insensitive to World markets. These will be the times of important Domestic Events like
Budget, Elections, RBI Monetary Policy or any other important event of domestic
relevance.

7. Relevance of SGX Nifty.

 SGX Nifty is the Indian Index traded on Singapore exchange. Since the trading hours of
Singapore exchange precede that of Indian Markets it may be a good sign to know how
Indian Markets are likely to open. However we should be very cautious because the
Volume traded on SGX Nifty is very thin. This is very important and at times may be
even used by some players to mislead Domestic retailers. It would be much wiser to
track US 30 and Dow Jones as their Volumes are much much higher and can not be
easily manipulated.

8. Can Banknifty and Dow Jones be related to each other?

This is a very important observation made by our experienced traders. If you see the
levels around which Dow Jones and Banknifty are trading you would be amazed to see
the correlation. They usually trade around the same levels.
This can be converted to trading opportunities at times. E.g if Banknifty is trading at
33500 and US 30 is at 34000 and we are bullish then there is a very high chance that
Banknifty can reach 34000.
The reason behind this is the game plan of Big Boys of the Markets. They tend to
converge at times. This has been observed many times in the past.

As an exercise you can track historical correlation between Nifty50 and DAX and look for
convergence.

To prove the impact of Dow Jones on our Markets let us discuss the Trading Opportunities of
the day in which Dow had a major impact.

Morning Trade
The example is for Bank NIfty morning trade for 12th Jan 2022
To plan our Morning Trade we must look at the following factors.
1. Price & Volume Action
2. Open Interest of Previous day
3. Dow Jones Spot Performance of previous session
4. US 30 Futures performance before the Market opens
5. Asian Market Performance before our Market Opening
6. Pre Open Market levels of Bank Nifty.
 As this is the first day we shall be discounting the impact of Open Interest as it is yet to
be discussed. But we shall discuss other factors

1. Price & Volume Action of Previous day

So on a daily chart we can say that the market is looking really Bullish.
Since the Bull run has been for consecutive 9 days there is some tendency of a pull back for
Profit booking at higher levels. However, opening a bullish up move is very much possible and
that's all we are discussing and interested about.

● So intraday also the price action was bullish

● We had more Bullish Volume candles especially towards the end of day.
● The Closing was above VWAP and near days High so this is also a Bullish sign.

So there is nothing Bearish about previous day price action.

So in such a scenario we expect that there would be many players who would have carried
home their position and tomorrow morning they would like the market to rise further to gain
profit.
So an up move is very likely tomorrow morning if we don't get a very big Gap Up.
The Price action needs to be validated by Open Interest, but since we have not discussed it yet
we shall discount it for today's discussion.

So today Price Action and Open Interest need to be further validated by Global market support.
Our Price Action and Open Interest point towards a Bullish scenario for the next day opening.
To further strengthen our view we must look at World Markets before our markets open.

We need to look at the Dow Jones Spot and Future Both.

So we can see Dow Jones Spot was Bullish Yesterday as
● It closed in Green
● Had a Bullish Price Action
● Closing at Days High

Now we also need to take into consideration US 30 Futures to see the net impact of US
Markets.
So
DOW JONES SPOT : Bullish
US 30 Futures : Bullish
—----------------------------------------------
NET Result of US Markets: BULLISH

Now let us also take a clue from Hang Seng Markets

So now summing Up

1. Price & Volume Action :BULLISH

2. Open Interest of Previous day : BULLISH (NOT DISCUSSED)
3. Dow Jones Spot Performance of previous session : BULLISH
4. US 30 Futures performance before the Market opens : BULLISH
5. Asian Market Performance before our Market Opening : BULLISH
So overall we are pretty Bullish and now we must plan our Morning Trade based on this
background and our Pre level Opening Market.

Pre Open Market levels of Bank Nifty.

Today we had a pretty good Gap Up in backdrop of Bullish sentiment.

Now in today's scenario we can look to buy a Call on every Dip and that should have been our
plan.
We should have selected ITM/Deep ITM strike and bought it on opening and trailed once the
price escalated.

To make things simpler we have specially programmed AI drives algorithms that give you
Morning trade clues on OI Pulse under Morning Trade Strategy.
Let's take example of 38400 CE

So had you purchased 38400 CE till 435, you could have easily trailed till 470 levels in Opening
minutes only.

So this is how our Opening Trades played out and we guess the impact of Global MArkets is
also clear to you.

In order to understand the impact of DOW on intraday trading opportunities let us look at the
second trading opportunity of the day.
Trading Opportunity 2 and DOW JONES

At 13.54 today we had a breakout on the down side. This was mainly due to Profit booking.
Usually we wait for a second consecutive candle to enter in Put trade but we entered the trade
mainly because of the DOW factor.
Since DOW fell at the same time from its higher level we entered a Put trade and we could
easily scalp successfully.
Though this was a risky trade but with Dow on our side we took the trade and results were
positive.

So with these two examples I guess that the impact of DOW on our market is pretty clear.
We shall now be using DOW as an integral part of our strategy in upcoming days.