Markets and News

Last month of the financial year, March is here and many things are going to be moving to a closure. Today is also the last trading day of the week after which markets will go on 3 day extended holiday. The start is not going to be great as Dow lost another 400 points in the trade last day but the bond yields are settling around 2.86-2.88% levels but the cut in equities markets means Asia is also in red today. The Chinese PMI data which came below expected and Japan’s industrial out put data coming below expectations. All this means India is also going to start slow.

Domestic Cues

Coming to domestics the GDP data comes and its a huge sigh of relief. The figure of 7.2% is impressive but when you look at GVA its at 6.7% which means that the higher gap between GVA and GDP is due to higher tax collections due to GST. There are bright spots in terms of Gross fixed capital formation which showed an impressive growth of 12% and its expected to be at 7.6% for this fiscal. The next big area is manufacturing which grew at 8.1% largely on the recovery due to post demonetization effect. All this coupled with decent core sector data means we have some good news to cheer up for. But the PNB worries and a slew of arrests on corruption charges will induce some worries to the market.

Derivatives Action

On the derivatives front, the futures trading have almost become 50-50 with short and long positions becoming almost equal as Nifty is exactly at the mid point of 10350-10600 band that it is in. The options data will give us some clarity. Traders are now finding call shorting a better source of making money than puts. 10700 call that’s at 60 rupees is an attractive strike to short. That gives them protection up-to 10760 and traders are finding it relatively safe and 4.2 lakh contracts got built up there.
The more attractive strike is 10900 which is at 20 rupees premium had 5.8 lakh contracts built there. 10920 is difficult to reach and traders can easily eat that 20 rupees premium. On the put side 10300, 10350 and 10400 puts continue to be active. 10400 is at 100 rupees which means 10300 is still considered as a floor for this series. All this means Nifty put call ratio has dropped to 1.36 from 1.40 seen at the beginning of the day yesterday.

What is the Nifty and bank nifty calls for the day?

I had suggested a long on Nifty and short on bank nifty yesterday at 10470-10500 range and 25100 range. If you have taken that position you will be in some profits on bank nifty as we are expecting a gap down opening for the markets today due to weak US and Asian markets. Bank Nifty will open below 25000 and if it touches 24900-24920 levels exit the position for a profit of 150-200 points and observe how the bank nifty goes. If Bank Nifty stabilizes around 24800-24850 levels after 3PM today then go for a long position to carry it for next week with a target of 25200 levels.
On the Nifty front, you will start with a loss as Nifty will open around 10430-10450 levels and then we might test 10420 levels which is the 100dma of the Nifty. 10410-10420 will be a support for Nifty and you can see Nifty rebounding from there. By the end of the day you might be sitting on zero profit or slight loss but carrying money forward during a holiday is not such a bad idea. The North east election results will be out on Saturday and any positive development for BJP means we might have a good Monday which will give you the 10600 you are looking for. So, wait and watch and take your positions to Monday for Nifty