Just when we were thinking that things are settling down, bang comes the retaliation from Iran and that just sent all the markets and crude into a tailspin. We had a recovery yesterday and Nifty crossed 12150 mark, and there was a selling that brought it down 100 points and closed at 12050 levels.
Just when we were thinking that there will be another recovery, Iran retaliated and hit the US targets near Baghdad and that sent crude to 71.2 dollars and all the Asian markets opened in deep red with cuts of more than 500 points on Japanese and Hong Kong markets. But now it is cooling off a bit as Brent came down to 69.7 dollars and cuts have narrowed down across Asia gives us a hope that if things don’t deteriorate further we can have a decent day today. SGX which went to 200 points negative is down 90 points down now.
On the domestic front, its the rising geopolitical risks that are dominating the mind space but a lot is brewing up in the domestic scenario also. The FY20 GDP estimates have pegged the growth at 5% which is the lowest seen in the last 11 years. The Q3 GDP is also likely to come below 5% and that is a bit of disappointment. It also pegged the GDP at 204 lakh crore and that means the fiscal deficit could be more than 3.5%.
On the other hand, Some reforms are coming in now with new ITRs and RBI pursuing its Operation twist 2.0 by releasing more and more bonds, which is keeping the bond market active. Technically, we will break the 50dma again today and that gets us to 200dma which is at 11600 mark. Though it is some distance away the Iran tensions will surely make some traders think of this.
On the derivatives front, there was a huge rebound in Nifty futures market with a buy figure of 760 Cr in Nifty futures which took the premium above 60 points as well as the overall long positions to 53% from 48%. Even in the options market, some sanity is back as there were considerable short puts returning to the market, though the figures of short calls and long puts were more. That brought the Nifty PCR to 1.19 from 1.11. 12050 put added 7.4 lakh positions and 12000 and 12100 put added 6.2 and 5.2 lakh positions respectively.
12000 put has the highest OI on the put side and we need to see what happens today. On the call side, 12200 call added 4.3 lakh positions and 12250 and 12300 call added 2.9 lakh positions each. 12200 call now has the highest OI making it a 12000-12200 range expiry for tomorrow.
What is the Nifty call for the day?
Today is going to be an action-packed day, as we had the news at 6 AM that Iran has struck two airbases of the US located in Iraq. That sent all of Asia into deep red and SGX Nifty opened at 200 point low. Then at 8.15 AM there was a tweet from Trump who says “all is well” and that brings a recovery in SGX and now it’s down just 90 points. So, we are likely to open down maybe around 11950-12000 mark and then take it from there.
Though it might be a tempting day to trade I advise you caution and watch very closely before taking any decision. If Nifty regains 12000 in the early morning then you can look at taking an appropriate trade or stay away. Today is a risky day where things can go either way. Don’t be surprised if we touch 12150 again or go to 11900.