Markets and News!

We have approached mid week and so far things are looking good. Nifty targets are more or less going fine and we are still on our way to 10700. Money making is looking lot more easier now, and that is the first sign that things are not as good as they look to be. US markets are on fire and made another all time high. Asia is also in a shade of green and India will also open in the green. But there are few worries that we need to negotiate with.

First is the continuous rise in Crude prices. Yesterday I was talking about 68.2 dollar per barrel crude price, today it has crossed 69 dollars and trading dangerously close to that 70 mark. Do not be surprised if Crude touches 70 dollars anytime in the next few hours. That could be a huge sentiment negative which will have an impact on our markets. Its because we are very much dependent on the Crude for many of our economic activities.

Question is why is crude going up like this? If you go back in time, 2003-2007 was the period where Crude shot up by over 300% and that time equities across the world also went up. So there is a direct correlation between crude and global markets. India will have to get adjusted to this and accept the increasing crude prices if it has to go up. Else we will see the period of 2011-2013 where crude went up from 80 to 120 dollars and we were sulking and went down from 6000 to 4800 on Nifty. So, both are possible. It all depends on how India wants to see this crude surge.

Futures and Options!

On the derivatives front yesterday saw a huge buying happening at the calls and also put shorting has resumed. As the premiums approached attractive levels and Nifty is approaching stagnation traders started shorting Nifty. This resulted in the Nifty put call ratio surge to 1.35 from 1.27. There was some shorting happening at 10600 and 10500 puts. 10600 put saw a record 10.6 lakh contracts that were shorted. The premium is at 80 rupees so there is a strong belief that 10550 which was the resistance for some time is a firm support now. Call selling has happened at 10600 and 10700 levels with the premium of 60 rupees 10750 remains the firm resistance.

What is the Nifty strategy for today?

Again a flat opening around 10650 is expected today. Will it make another all time high or not needs to be seen. In every scenario 10680 is a technical resistance and Nifty will take support again at 10600 levels. So if we close above 10650 then we are on track to meeting the 10700 target this week itself. So observe the market and wait for my tweet during the day to explore a chance if we can do some options trading.