Markets and News
Start of the 3rd week and we are all waking up to a huge currency crisis in Turkey. The Turkish Lira fell by 18% on Friday, the largest single day fall in last 17 years and in this year it fell almost 40%. This is mostly to do with how Turkish govt runs its central bank. There is a lot of Govt intervention in the monetary policy formation and when inflation hit 15% still Govt wanted to control currencies. This is disheartening to the currencies across the World. Dow Jones closed almost 200 points down and the entire Asia today is down with every market losing more than 1.5%. Hong Kong is down more than 450 points now.
On domestic market front, India might not get affected by Turkish Lira issues, as the India exposure to that country is very less. We have our own fundamentals to react to and we have the June IIP data coming at 7% vs expectation of 6.1%. It looks as a fantastic number, but the point to be considered is this is coming on a low base of -0.3% seen in June 2017. So, that takes away some excitement. Manufacturing has seen a growth of 6.9% and capital goods saw a growth of 9.6% and consumer durables saw a growth of 13.1% again on a low base of -3.1%. How much market takes note of it needs to be seen now. Q1 results are almost over now and we all wait the CPI inflation numbers.
On the derivatives front, there has been a significant drop in the Nifty futures premium from 26 points seen on Thursday to just 9 points by the end of Friday. This is a big fall and this is on the back of some active selling happening in the futures market. The overall long positions is at 56% and in the options market also the calls were more in demand than puts and the put call ratio reduced to 1.75 from 1.80 but still its at higher levels. 11500 call saw the maximum open interest build of 4.5 lakh positions.
What is the Nifty call for the day?
Nifty will open gap down today on the back of Turkish Lira crisis and it will be below 11400 mark. If you by any chance have the short position taken at 11470 you will have a huge profit. See, the Nifty testing 11350 and stabilizing there. 11320 is a very strong support. Observe the Nifty trend today and dont rush into any positions.