Markets and News

We are well into the 2nd half of the month and things dont look as cheerful as it should have been. US closed flat to positive on Friday but the macro and global scenes have changed over the weekend. The trade wars are intensifying, added to that China and Russia are going for the same Presidents and looks like those Presidents are going to last a long time. Putin is already 18 years in term and he will now go on to serve till 2024 and that takes him to 24 years at office. Chinese premier is all set to replicate him and these small little fundamentals are keeping Asia flat. These are not worries that are unknown but when they actually happen it tend to have some impact.

Domestic Cues

On domestics there is one good news that India had over weekend is the current account deficit numbers that came on Saturday. RBI was expecting a current account deficit of 2.4% of GDP but what actually came in was a 2% deficit. That is primarily due to increase in the software exports that brought more dollars, higher remittances by the Indians living abroad that increased the supply of dollars and third and most important reason is more than a 100% increase in the foreigners travelling to India that brought more dollars. That made the current account deficit come at 13.5 billion dollars for Q3 vs expected 15.1 billion dollars. The other point to note is only 0.88x subscription of Bandhan bank IPO. QIBs oversubscribed it 2.3 times but NII and RII subscription is low. Today we need to see if it subscribes full, as today is the last day.

Derivatives Action

On the derivatives front, Friday afternoon saw a worst fall that made the long positions in futures to go below the half way mark again. On Friday morning when the trade opened the market was 52% long and at the close of the day it fell to 47% long. This was due to a massive shorting of positions and today there might be some short covering. On the options front, there has been a massive call shorting that started on Friday afternoon with 10300 call seeing 15.4 lakh contracts and 10200 call saw 15 lakh contracts. 10400 call also saw 6.5 lakh contracts build up. On the put side there was massive unwinding that happened at 10400 put which saw 15 lakh contracts disappearing. 10300 put saw 8.3 contracts disappearing and that took the Nifty put call ratio to 1.09 from 1.23 at the beginning of the day.

What is the Nifty and Bank Nifty call for the day?

A flat Asia means we might open flat around 10180 levels and 200dma is at 10161 now. The series low is at 10140 where Nifty will make a double bottom. So, we might see a strong support around 10150 levels which in all probability might hold. On the upside 10240 is a resistance coming in. Today also is a day when you might want to wait and watch to see where Nifty goes. Wait for my call on twitter before taking any action.
Bank Nifty also will open below 24500 mark and might find some support a 24400 levels and might trade in a narrow range. This is the final phase of consolidation and any break below 24400 should be seen as a reason for worry. So, its again a wait and watch day for bank nifty also.