Yesterday, I have given a series of technical reasons for the NIFTY to be in the band of 9980-10030 band and close within that range and it came bang on with NIFTY closing at 10017. Today I have fundamental reasons to talk about the movement of the market. Yesterday US markets closed at a new highs and Asian markets are in green. Will that rub off to India today? Maybe not. Now I will tell you why World is up. The IMF forecast that came up has upgraded the world GDP growth to 3.5-3.6% and downgraded India’s GDP growth to 6.7%. Though this figure is double that of the World, India is coming down while World is going up!! That might not go well with the markets today.
The Q2 results are just round the corner and serious results will start tomorrow with IndusInd bank coming with the results. The Q1 has been a washout with the average results showing a poor 1-2% growth. This time analysts are expecting a higher single digit growth of 7-8.5% and if that starts happening then we might see NIFTY picking up momentum again. But otherwise niggling worries will continue.
This quarter is GST quarter and how companies got impacted by GST will be clearly knows in this quarter. Companies like HUL and L&T which are giants in FMCG and Capital goods sectors have issued warning of a big impact of GST on consumption. If that comes true then we are sitting on a Q2 which might come just as Q1. And if that happens expect another 5-7% correction in NIFTY from the present levels which will again take NIFTY to 9500 levels!! Worrying!
Futures and Options
The cues from derivative markets also doesn’t present a great picture. On the day when NIFTY reclaimed the 10000 level and closed above FIIs have actually sold in the Futures market. 7 contracts were sold for every 4 contracts bought and that means the premium on NIFTY futures which was at 28 rupees at the beginning of the day came to 19 rupees at the end of the day. NIFTY gaining on a day when premium is shrinking puts pressure on the index.
So, the technicals are also not supporting NIFTY to be bullish today. In the options market 10000 put and 10000 call are actively being shorted and that means 10040 will be a cap for this series on the upside. But some momentum is building on 10100 level and that needs to go up if we want an all time high for Diwali!!
Else 10100 will remain a dream. The NIFTY put call ratio remained stagnant yesterday at 1.39.
So what is the NIFTY call for the day?
It will have a slightly positive opening around 10030-10040 mark and will encounter some resistance at 10050 levels and this is a difficult level to cross and on the downside 10000 will offer a strong support. so for the day, I see NIFTY being in this range and if 10050 is achieved today when you can exit the position that you took on Monday at 9960 levels for a profit of 90 points. If you want to take risk and revise your target to 10080 you can do so as tomorrow is likely to be a better day that today. But when you revise targets, risk of losing is always higher! So think and act!!