Markets and News!
Entering at right time is always an asset for profitability. Yesterday I talked about taking a long position around 10250 range and you would have got an opportunity to go long around 10270 range. If you were carrying those positions for today you would see good profits. What is going to be a big positive is the rally in the bond markets after equity markets closed. By the time they closed at 5PM bond markets touched as low as 6.889. That is a huge positive as they ended on Friday at 7.04. I have already talked about the positivity created by the scrapping of OMO by RBI. Last night US markets also ended on a high and today whole of Asia is on a high so you would expect a positive start to Indian markets too.
Futures and Options!
There was a lot of mixed reaction there yesterday. NIFTY futures premium hardly moved, and it settled at 21 rupees vs 26 rupees seen at the beginning of the day. The overall long positions in futures improved mildly to 50% from 49%. With 50-50 long and short we can expect anything in coming week. The volatility however dropped 2% yesterday to settle at 13 and that indicates that things are slowly settling down. 10200 put option has seen over 4 lakh shares adding to open interest and 10500 call that has 6 lakh shares adding to open interest. At 25 rupees premium 10500 is a good stock to short and pocket the premium. Same is the case with 10200 put at 50 rupees. That means 75 rupees premium with no investment. That also means the roof is at 10520 and the floor at 10150 levels. Now things are going to look more clearer with 9 days to go for expiry. All this action kept the Nifty Put call ratio unchanged at 1.23.
On the stock front, I strongly recommend buying NBFCs and banking stocks like IndusInd and Yes bank. NBFCs primarily because of the delay in issuing OMOs by RBI and that means liquidity in the system which is positive for them. IndusInd and Yes bank because they are going to find themselves in Sensex replacing Cipla and Lupin. M&M is another stock which will do well, as Anand Mahindra announces the succession planning and more investments going into its US operations.
What is the NIFTY call for today?
Hold on to your long positions and allow 10350 to be reached. That would mean a decent 80 rupee profit for long positions taken yesterday. NIFTY will open flat to positive around 10320 and might go to 10350 before settling there. The close is likely to be positive and do not take any fresh long at this levels. Wait for NIFTY to drop below 10320 before taking any long position. If that happens take a long position and wait for market to further go up in the coming days.