Markets and News
The news that welcomes today is the Brent Crude touching 73.80 dollars and that can never be a good news for India. The rise is firmly attributed to the sanctions that US wants to impose on Iran crude imports and Iran accounts to roughly 5% of the global crude production. This is the highest level of crude since May 2014 that means we are now going back to pre modi era of prices. The US markets were flat with Dow closing in marginally negative range and S&P marginally positive. Commodities are pushing up and that is making Asian markets to trade in green. China is a predominantly commodity driven market and the positivity there is pushing the other Asian commodity markets up.
Domestic Cues
On the domestic front, Crude will be the big factor today and there are some other factors that will contribute for the movement of Nifty today. The most important is the Q4 results that are coming. Q4 has been good so far with ACC reporting good numbers and tata sponge and HDFC standard life also reporting good Q4 numbers. Infosys disappointed a bit but leaving that everything else seems to be good. Today is the day of two big companies TCS and IndusInd bank that are going to come up with Q4 numbers. IndusInd will come with results in the afternoon and is expecting a 25% growth in NII and a NPA of around 1.2%. TCS which comes out with its results in the late afternoon is betting on a PAT of 6770 Cr and the guidance will be watched very closely.
Derivatives Action
On the derivatives front, yesterday’s Nifty movement suddenly created a lot of longs in the system and the 29% long positions at the beginning of the day finally ended at 36% at the end of the day. At the beginning of the series it was 18%. So, the long positions have doubled. On the options market also calls are getting more demand than puts and that has brought down the Nifty put call ratio to 1.60 from 1.64. 10700 call and 10400 put have the maximum open interest now compared to 10500 call and 10000 put at the beginning of the series. This clearly shows that the floor of Nifty is shifting upwards and now we are looking at a 10300-10650 range of expiry for this month.
What is the Nifty and bank Nifty call for the day?
Today is the bank nifty weekly expiry and Bank nifty is at 25100 levels. The 50dma of bank nifty is at 24940 and there is a chance that bank nifty might go and test that level. The open looks to be positive and a lot of volatility is expected. I suggest to stay away from markets today but if you want to test waters then go and buy 25100 put which is at 65 rupees premium and see where it goes. If its not going anywhere you can always exit. If it goes to 100 rupees you can make some money.
Nifty is likely to open flat on positive side today because of the global factors at around 10550 levels. The rough zone is 10580-10600 levels and today the support will come at 10460 levels which is also the 50dma for the Nifty. My gut feeling is Nifty will fall today to 10500-10480 levels but I will not suggest you to short as it could be risky. But if you are a compulsive trader then go short on Nifty above 10550 with 10480-10500 as target. But the general suggestion is to stay out.