Global News and Markets!

Big over night news of Fed hiking the interest rates wakes us up this morning. Fed has hiked the interest rates by 25 bases points to 1.50% and that is expected. It also says that it expects the US GDP to go to 2.5% from 2.1% and inflation to settle down at 1.7%. The jobless forecast continues to be at 4.10%. The result is US markets celebrated it mildly with S&P losing some sheen at the end of the day. The Asian markets are mixed and finding their foot and India is likely to be open gap up of 30-40 points .
Domestically today is the big day with Gujarat election 2nd phase election happening in the crucial 93 seats in central and North Gujarat. Ahmedabad is going to be vote today and so does the congress strong hold of North Gujarat. In 2012 congress won 41 out of 93 seats compared to 52 won by BJP. So this was a neck and neck race last time and this time we need to see which way the wind blows.

Meanwhile EC has issued show cause notice to Rahul Gandhi for giving an interview to a local Gujarati channel after the campaigning time is over and we need to see whether that creates sympathy for him or works out in the advantage for BJP. By 1PM markets will get the wind direction of the election and how they react after that needs to be carefully observed. The exit poll will be out by 7PM.

Futures and Options!

On the derivatives front, one interesting thing to be observed is the unwinding of positions happening at 10300 level yesterday as market was going through a high degree of volatility. 2.1 lakh contracts go created but we have seen almost 2 lakh unwinding of positions seen there. These are the short positions created and with NIFTY nearing 10300 many of these positions were unwinded. 10400 call still is seeing some shorting with almost 2.2 lakh contracts getting generated.

The maximum action is seen at 10500 call with maximum of 5.2 lakh contracts getting created and at a premium of 35 rupees we are looking at 10550 as a resistance for an upside seen. On the put side 10200, 10100 and 10000 puts continue to be active indicating that 10080 is a strong support for any fall seen. The 10200 put has a premium of 120 rupees which traders are actively shorting. The volatility went up by 4% and the put call ratio is almost stabilizing at 1.30 mark.

What is the NIFTY strategy for today?

You will see a gap up open today morning. But It is better to stand by and watch the market till the afternoon and see how it goes. Very important to watch the behavior of the markets after 1PM. Whatever maybe the opening today markets will not move much and would wait for the 1PM trigger.

If NIFTY remains above yesterday’s close after 1PM it is better to take a long position. If its not clear then stay away, wait for the exit poll. Today’s position is for the Gujarat election and should be taken with care.