The big news first! 178 out of 228 items in 28% tax rate is cut to 18% and few items to 12%. The only items that remain in 28% are cement, tobacco and luxury cars. That comes as a big positive as well as negative. This GST has come into place for increasing the tax collections but this pruning at the last minute might act as bit of a negative. US closed negative on Friday, and Asia is also looking mixed.
The crude oil is still stuck in 63.50 to 65.00 range and that is not going to be a positive for the market. The fiscal deficit comes into picture because of decrease in tax rates, and that will put pressure on the bond markets and don’t be surprised to see bond yields touching 7% for the first time in almost 2 years. Increasing in bond yields can never be good for equity markets. Added to all this is Coal India which came up with howler numbers and at 280 also this stock is costlier. You can expect a big fall in Coal India and Venezuela bankruptcy news will pull down ONGC.
On the derivative front!
The biggest negative is NIFTY premium coming down from 53 rupees at the beginning of Friday to 12 rupees at the end of the day. That means the index was heavily shorted as the NIFTY value was going up. The FII long exposure in futures market which is a bench mark for the market sentiment is at 52% now. At the start of the series it was at 71%. Now there are equal number of shorts and longs in the system. On the options front from put selling people are moving to put buying and call selling. That means the market is now moving from buy on dips to sell on rallies. For every 1 put sold there are 12 puts bought and for every call bought there were 14 calls sold. That is a staggering shift in the trend. 10400 call was heavily shorted with 2.6 lakh contracts and 10300 put which was bought with 2.1 lakh contracts. That means NIFTY can fall down but the upside is capped at 10350-10380 zone.
What is NIFTY call for today?
A flat opening is expected around 10320 range and 10350 is a strong resistance. As told, this has converted into sell on rally market so taking a short position with 10260-10280 range is not a bad idea. This market is in a mixed trend with a downward bias.
Q2 results for today
1. Adani ports
2. Apollo Hospitals
9. PC Jewellers
11. United bank