Markets and News

Start of a new week and this is the expiry week of the second month of 2018! Last closing week was on a high where we were sitting on a cusp of 11000 and now its after a havoc that shaved off 8% from the highest of 11170!

Global markets look positive with US closing in positive territory. Much of Asia is on an extended new year holiday and the ones which are working are doing just fine. Brent Crude has started its upward journey again and its now above 65 dollars. The US 10 yr yield is also at 2.9% which is definitely not a great news for our bond markets.

Domestic Cues

On the domestics in the big confusion of PNB scam that hit the banking sector, today there is some good news coming from the steel sector. Tata Steel goes shopping again after many years and now they want to acquire Bhushan Steel, the debt ridden steel company for a whopping 40,000 Cr and Jindal steel emerged as the highest bidder of Monnet Ispat. That will act as a propeller and a feel good factor. Otherwise we still have the worries of PNB and its LoUs issued to various banks. Search notices have been issued but we still have to see what happens today on the ground and how much PNB and Gitanjali Gems corrects today or is the correction over for both.

Derivatives Action

On the Derivatives front, the action seems to have clearly moved towards the options side with 10500 and 10600 call heavily shorted on Friday. 16.5 lakh contracts were shorted at 10500 where the premium was 110 rupees and that dropped to 53 now. 10600 call also saw 16.7 lakh contracts created and the premium dropped from 60 rupees to 25 rupees. So 10650 is the firm roof and even 10600 can also be a roof for this series.

On the put side the last one hour fall on Friday saw many puts gets unwounded. 10500 put saw 8.5 lakh contracts squared off and 10600 put as 4.8 lakh contracts disappearing. 10450 put saw 1.5 lakh contract built up and its at 80 rupees. That means 10370 is the firm support for Nifty. All this has brought down the Nifty put call ratio to 1.07 from 1.13 seen at the beginning of Friday.

What is the Nifty call for the day?

Today Nifty will open flat at 10450-10480 range and 10600 which the 50dma and 10380 which is the 100dma are the resistance and supports for this series.

If you want to take positions, its better to go long at the open below 10500 with 10550 as the target for intraday. This can be extended to 10600 for the series if you have risk appetite. On the options side, 10550 looks as the pivot point so a short straddle at 10500 which is at 171 rupees is an attractive proposition to write. You will receive 171 points premium and on the upside its 10585 and on the downside its 10420 which are the markers. This can be taken only after a careful study.

What is the bank Nifty call for the day?

Bank Nifty will be positive today and take a long position at the open at around 25200 levels with 25500-25600 as the target.