Markets and News
Crude is the biggest worry as we approach the weekend. Brent Crude has crossed 72.20 dollars and its the highest value that it has reached in last 3 years. An emerging market like India cannot take this beyond a point. Yesterday when crude was at 70.5 dollars OMCs were asked to absorb 1 rupee of the total price. Today it has gone up almost 2 dollars higher than yesterday, now how many rupees OMCs will absorb without rising the prices. Elections are round the corner and Govt cannot afford to rise petrol prices and now who will absorb the losses needs to be seen. Dow jones closed negative yesterday and Asia is also trading mixed so India will have some impact of all this.
Domestic Cues
Domestically, CPI and IIP data is slated to be out today and the Q4 results season will kick off officially tomorrow with Infosys coming out with its Q4 results. The IIP for the month of February is expected to come at 7% vs 7.5% seen in the previous month and the inflation is also expected to be around 4.4% for March which is almost same that was seen in February. But all this data will come post market hours and today its going to be technicals again that will run the markets. The Nifty’s 50dma is at 10440 and that could be a strong resistance point for the market and Bank Nifty’s 50dma is at 25190 which is 100 points away from its present level.
Derivatives Action
But the derivatives market is showing a different trend. Yesterday saw a sudden surge in long positions for Nifty as the markets came down in the morning. The overall long positions have moved from 22% to 25% now and that presents some optimism for Nifty. On the options front, puts started to get into demand again and the Nifty put call ratio is at 1.50 level now. 10400 put saw 6.9 lakh contracts build up and 10300 put saw 4.8 lakh contracts. 10100 put saw some unwinding of positions to the tune of 2.4 lakh contracts. On the call side 10700 is seeing massive unwinding of positions as premium is not surging. It saw 11.2 lakh contracts unwinding. But 10600 call became active with 8.1 lakh contract build up.
So what is the Nifty and Bank Nifty strategy for the day?
Today is Bank Nifty’s weekly expiry and the SGX suggest that it will have a open above 25100 levels. But the crude worries will not allow it to go up and during the day there is a danger of Bank Nifty cracking. Yesterday you have taken a short at 25100 or 25000 put and 24930-24910 is your cut off band. Bank Nifty should stay above that but just in case if its reaching there you might have to face some losses. That can be offset if you take a short position in Bank Nifty futures for April end expiry so that it will cover the possible losses that the short puts might give.
On the Nifty front, Nifty might open at 50dma and it might be a big resistance and Nifty might start to correct after that. so close the long positions that you have for a 80 point profit and open a short position on Nifty between 10410-10430 with 10350 as the target. This might work well today. Anyways you are making money on the long positions now and you might make some money on the short positions that you will take today.