Markets, Elections and USA!

Big fall in US markets but Asia looking green today. Big concerns about Gujarat results, but GST started showing positive results. Everything looks confused and we are waking up to a day where things don’t look as they appear. Crude has settled down below 62 but US market is still on selling spree due to delay in tax reforms and other domestic factors.
India has its own domestics giving worrying signals. The latest opinion polls show that the gap between BJP and Congress further reduced to 4%. Now BJP has 41% vote share and Congress 37% vote share with still a month to go for the polls. Are we seeing a much tighter Gujarat election? Is there a real chance of a BJP upset in the polls? Next few days will give some clues.
The other news is the September GST tax collections that are at 95200 crores compared to 92000 crore in July which comes are the positive. In Fact the state’s deficit share is slowly narrowing down. The deficits coming down this quickly is a positive sign which means that Govt doesn’t have to take care of the state’s losses for 5 years as expected before. Andhra Pradesh is just above 5% and for Telangana it’s around 6.5%. But there are some states like Tamil nadu which are the cause of worry with over 50% deficit. The october GST collections are expected to pick up and analysts are forecasting a 1 lakh crore collections by the end of the year!
On stock front HDFC will be in pressure as govt has referred to RBI if HDFC should be removed from its higher foreign investor exposure. That means more domestic investors and that would mean some uncertainty for the stock.

On derivatives front

There was a massive shorting of futures continuing yesterday also. The NIFTY premium is now at 36 rupees down from 47 rupees seen at the beginning of the day. The 10200 call also has started seeing shorts and that’s bit dangerous for the market. There was some put buying seen at 10100 level indicating a short term dip. 10120 is the 50 day moving average and NIFTY is just there. What happens to that is something that needs to be seen. The put call ratio is at 1.12 levels down from 1.19 seen at the beginning of the day yesterday.

What is the strategy for NIFTY today?

NIFTY will open flat around the 50 dma of 10120 and what happens from there needs to be seen. If NIFTY stays above 50 dma till noon and moves between 10120 and 10150 then its good time to take a long position. But if NIFTY falls below 10120 and trades between 10100 or goes below that then its better to stay out and see what happens by the time europe opens. The closing is very important as it coincides with Bank NIFTY weekly expiry. Any close below 10120 is negative and a close below 10100 is a disaster.
Q2 results season has ended.