The Wall fails today. 24,500 is next

3. US tape closed all green. Tuesday, S&P 7259. NASDAQ 25,326. Dow futures 49,432. Three records back live overnight. Add it up, GIFT Nifty is trading at 24,303. Implied gap up above Tuesday's close in is almost plus 250 points. We are opening above the 24,300 wall before the bell rings. But here is what nobody is telling you. The wall is not the wall anymore. Pro yesterday went three legs bullish. Pro covered 19,394 of short calls it had written on Monday. Pro added 5,600 fresh futures long.

Pro trimmed 40,000 long puts. Three legs all bullish into the close. Now, layer the macro overnight. 73. The downside hedge that the pro just trimmed gets even cheaper to leave off. Pro is walking into Wednesday with conviction long. FII did the opposite. FII added another 5,000 fresh index future shorts. FII wrote 20,000 more short calls. FII stacked 31,000 more long puts. Three legs, all three bearish. Then look at the cash tape. Tuesday, FII sold around 3621 crore cash. DII bought 2603 crore cash.

April closed FII minus at 70,000 crore cash, whereas DII plus 51,000 crore cash. The same handoff foreign desk liquidating domestic desk is absorbing it. The headline number through though is the index option line. FII sold 27,000 crore index options on Tuesday alone out of a 29,000 crore total derivative loss. 93 % of FII's bear bet yesterday was index options, not futures, not stocks, only index options. That is, FII is paying for protection. That is, FII not calling a crash. Clients, three legs, same side as pros.

Long futures, plus 1,41,000. Long calls, 2,15,000. Short put, 6,44,000. The trap leg is the short put. If we rip past 24,300 today, those short puts are free money for the client side. The same retail trap pays out for once. Two desks, same chain, opposite trade. Today the wall picks the winner and we'll see whether the clients and pros win or the FIIs win. So options is telling us a different story. 24,000 was the magnet where the put floor was built. Today the magnet becomes the floor once again.

24,100 to 200 is the buy zone and dip into year today is a gift. 24,300 was the hard wall yesterday. 61 million call OI built over there. 2 million on Monday alone. Biggest single day call OI built on the May series. Today the wall breaks or we are opening near the wall. The writers either cover it up or we see a mean reversion. But 24,500 is the next stop. The major call wall above 24,300. So, wing 23,800 below the wing is the only place that this thesis dies.

We are 500 points above it. ATM straddle on 8th May, front weekly was trading at 223 yesterday. 42, the hedge below us is cheap. 23,900 put was around 50 rupees yesterday. At Brent crack and Kospi Plus, the same put in the first hour is going to cost you less than 20 rupees. Education first. The wall is not where the writers want to defend. The wall is where the writers wrote calls because that is the highest strike retail bought. When the macro tail breaks the cap, the wall is just a sticky paper line which is going to break in.

Sector tape from Tuesday. So, energy, defense, consumer durables, all were strong buys. IT and real estate, auto and metals were also shining strong. On the sell side, we had pharma, chemicals, healthcare, small cap and some broader market indices. So, except for India VIX, everything is in neutral to buy zone. So, that's the read off. One, energy was a strong buy yesterday as well on a $113 Brent. Today, the Brent is at $108. The strong buy on energy was setting up the tone before the macro cracked.

The sector reversal candidate. Watch oil marketing companies on open. Watch refining companies as well. Two, auto held. So overnight is bullish for Indian auto exporters and a global supplier book as well. So two-wheeler and four-wheelers both have a tailwind today that you have to keep a watch on. The drag was pharma plus small cap and some broader names. Watch if the breadth catches up to the index today. If it does not, we are running narrow leadership into 24,500. Narrow leadership is fine for one day breakout.

It is not fine for a sustained up move. So keep a watch on the broader market if that catches up today as well. So Reliance is not picking up with Brent cracking today. The Reliance read flips. So watch the open print on Reliance and keep a track on Reliance as well. So my read, buy on dips continues with cheap hedges. We are breaking around that 24,300 barrier today. Most likely we are going to break out of it. Next stop is 24,500.

24,100 acts as a good support. 24,000 is already a good floor. So any dip towards 24,100 or 24,200 can be bought into. That is the trade for today. If you bought hedge at IVs of 17 yesterday, you are sitting in the cheapest insurance you will see this month. Do not lift it out. You cost nothing but you lose on the hedges which have been already paid off but it doesn't matter because hedge is what makes your portfolio strong. If you did not hedge today, then don't chase it.

Today is wait day. Let the open print in. Let all the energy, pharma, Reliance, auto settle down then buy the dip around 24,100 or 200 with 23,900 as the hedge. That structure pays into 24,500. So today's calls for in one line. One Nifty closes about 24,300 the wall breaks clearly. Day high prints between 400 to 500. India VIX stays inside that 16 to 19 mark, 10 straight sessions sub that 19 levels. So Pro chain Pro's Wednesday open holds the call cover.

No flip backs to shorts so no mean reversion where the pros will be playing. RupeeCase Nifty 10 day alpha holds on versus Nifty. So the data doesn't lie. And what we are looking into is that is the edge. If this added value guys into whatever you are doing, please share it with one trader friend who needs it right now and subscribe it on Apple podcast and Spotify and give a five star if you like this as well. com as well. I am building RupeeCase, India's first systematic investing terminal.

Link is present in the show notes. So you just got earlier guys. See you all once again on Sensex expiry. That is tomorrow. And a happy trading guys.