Markets and News
After a lot a drama yesterday, we are waking upto bad macros plus drama continuing. The Karnataka story has just began and the next few days will see more things unfold but today the worries are more. The dollar index has crossed 93.3 and the result was Rupee touched 68.10 and the bond yields have touched 7.9% and inflation is picking up with services inflation almost at 6% we can expect the risk free to remain where it is or slightly might go up. So, we can think of a rate hike coming up in the June or the August policy of RBI. For now, Dow ended more than 200 points in red and Asian markets in deep red and Crude has touched 79 dollars before receding to 78.10.
Domestic Cues
On domestics, Karnataka has delivered a half fractured mandate with BJP almost near the halfway mark but Cong-JDS have the numbers to form the Govt. That could mean uncertainty for few more days as both parties are in the race of Govt formation. This event is now slowly losing its value and market might move beyond this. More important news is the April trade deficit data came at 13.7 billion dollars compared to 13.2 billion seen in March. This is a reasonably good figure considering that oil imports went up by over 14% and rupee devaluation also added to growth in imports. Despite all this imports went up by just 4.6% to 39.6 billion dollars. The good news coming from exports which showed a growth of 5.2% to touch 25.9 billion dollars. The good news is a rise in engineering and pharma exports.
On Q4 front also good news is coming and yesterday Britannia declared good numbers and today names like Tata steel and ITC are coming up with the numbers today.
Following are the Q4 numbers expected to come today.
1. Brigade Enterprises
2. Century ply
3. DB corp
4. Hindalco
5. ITC
6. JK Laxmi cements
7. JSW steel
8. Tata steel
9. TVS Motors
10. VIP clothing
Derivatives Action
On the derivatives front, there was a lot of buying in the futures market in the morning and lot of selling in the afternoon as BJP started to lose steam. The options market presented even a more interesting trend. 10900 put started to build lot of open interest as Nifty crossed 10900 and 5.4 lakh contracts got created here. Quickly as Nifty started to fall unwinding was seen at 10400, 10500 and 10600 puts where 6.9 lakh, 7.6 lakh and 7 lakh positions were unwound. The Nifty put call ratio is now at 1.60 vs 1.64 at the beginning of the day because of the put unwinding.
What is the Nifty and Bank Nifty call for the day?
Yesterday at the opening I advised you to go long at 10800 with 10880 as target and that target was achieved and Nifty went to 10920 so you might have made a lot of money. Today things are looking bit more tougher than yesterday. Nifty will open gap down at around 10750 which is a support level and should be held. There are two trades that you can take. If Nifty opens at 10750 and goes above and stays for first one hour then its better to take a long position with 10820 as the target. If that doesn’t happen and Nifty stays below 10750 then wait for my tweet to take an appropriate position.
Bank Nifty will be more volatile and I suggest to avoid it today.