Markets and News!
The last trading day before Christmas and the Santa Claus rally has already started in US. The entire US has ended in green and that green seems to have rubbed off on Asian markets and they are also looking green. The result is we also might start off on a flat note and we need to see what happens from there. There are no strong fundamentals across the World to drive the markets. The Atlantic crude pipe might start in early January but the crude prices are still close to 65 dollars and that is the only worry for India.
On domestic front, the only fundamental is the 2G spectrum verdict which went in favor of A Raja and at it appears as if it was a setback to BJP. But a closer look at it, it becomes clear that 2G verdict is likely to bring DMK and BJP closer as AIADMK is losing steam in Tamilnadu. Market understands these dynamics and you would not see any major reaction happening.
Futures and Options!
On the derivatives front there has been a slightly bearish trend that appeared in the market yesterday. After a long time we have seen unwinding of puts. 10500, 10400 and 10300 puts. The Nifty put call ratio dropped a bit to 1.49 from 1.50. This is mainly because of the calls that are getting shorted now. 10500 and 10400 calls saw maximum shorting and 10500 is the firm resistance for the market. Now the calls seem to be a better bet to make money than puts. yesterday was the day when we have seen the shift happening from the put side to call side. Will it follow through today needs to be seen.
What is the NIFTY outlook for today?
Expect NIFTY to open around 10450 levels and keep your long position intact to see if 10500 will be reached today. Today is Friday and expect some degree of volatility. Long Christmas weekend is coming and many traders would want to book profits and want to head to holiday. So we might see some degree of upswing towards 10500 and on the downside 10400 will offer as a support. So the best way to deal with the market is to try selling a 10500 call. The premium is 60 rupees now and if you do that close to 10500 your premium might go up to 70 or 80 rupees so you will get a leverage upto 10580 and with 3 days to expiry next week this is always an attractive proposition. But there is a risk in it.
The less riskier is shorting 10300 put that has 40 rupees premium and shorting it at any dip towards 10400 will increase the premium to 60 rupees and that might give you room upto 10240 which is a very safe proposition. For any shorting today is the best opportunity.