Markets and News!
Start of a fresh week where everything looks green. US markets have ended again at new highs and Asia is also green today. But India has fundamentals to deal with and that is the Gujarat. 1st phase of election in 89 out of 182 seats are done on Saturday and if today’s open is of any indication then BJP seems to have more or less held on to their position. In 2012 out of 89 seats that went to poll BJP won 63 out of them and Congress won 22.
These 89 seats are spread in South Gujarat and central Gujarat. South Gujarat is dominated by patel community and Hardik Patel’s influence is maximum here. Central Gujarat where Surat, Ahmedabad and Vadodara are located have seen lot of protests from trader community against GST. So reports are indicating that BJP will hold on to their 63 seats then we are expecting BJP to hold on to 115 seats that it held last time.
The other fundamental news US fed meeting is happening this week and the much awaited rate hike decision will be announced. We need to see how much NIFTY gets affected by it because Asian markets will react negative to any big hike by US fed. Added to this is the fundamentals in India that include IIP and CPI data which will also come this week. Inflation is expected to be higher and could cross 4% also.
So, with Gujarat we have host of other fundamentals that will affect the markets this week.
Futures and Options!
On the derivatives front, Friday saw a huge bull run in the derivatives market. The Futures have seen a lot of buying and now the overall NIFTY futures is net long with 52% long positions and 48% short positions. In the options market there has been a huge unwinding of put positions.
The long put buying that was seen for 10000 put seems to be going for a profit booking and so is the 10200 short call. When Nifty broke 10100 mark there were some traders who shorted 10200 call and lot of unwinding is happening there as they are confident that expiry will happen above 10300 mark. Unwinding of 10400 short calls is also seen as the Gujarat results might take the markets to 10500 levels. Infact the maximum open interest was at 10200 put where shorting it will give you 85 rupees premium. That means they are not expecting it to fall below 10120. On the other side call shorting is being seen at 10450 call which is at 50 rupees premium indicating that 10500 is the upside. The Nifty put call ratio is now at 1.26 level and we can expect more surge in it.
What is the NIFTY call for the day?
Keep the long position and try to take more long position by buying calls. There is nothing much to be done for today as the positions you took last week around 10150 is at a handsome profit. Today the market will open gap up on the back of perceived good showing by BJP in 1st phase. The open might be at around 10300 levels and 10320 is a resistance. So it will be a range bound day with 10270 and 10320 will be the range. Keep your longs. Dont sell them!