Markets and News
Finally weekend is here and looks like World markets and commodities are taking a slight breather. US markets have ended in a flat to negative territory with Down Jones closing over 80 points in red. Technology stocks are primarily responsible for the fall. Asian markets are also mixed with Shanghai and Korea are in slight red whereas Hong Kong and Japan in mild green. The commodities prices seems to have stabilized a bit and as the weekend is approaching everyone wants to take the profits off the table after a huge rally seen in last few days. Brent Crude also cooled off a bit from the highs of 74.75 yesterday to settle at 73.80 now.
Domestic Cues
On domestics there are quite a few things happening around. RBI has released the minutes of the meeting of the credit policy announced earlier this month and the tone of the policy is more hawkish than expected. There is a feeling that only Micheal Patra is talking about rate hike but now it gives a feeling that Chetan Ghate and Viral acharya are also very hawkish though they didnt vote that way. That makes the probability of a rate hike somewhere this year looks like a real possibility. Second, there is major disagreement between RBI and Govt on the rules of framed by RBI for lending by the banks. Govt is saying that these rules are just impractical.
On the other side there is some good news as well. After a minor disappointment by Infosys, Mindtree and TCS have come up with fantastic Q4 numbers. The best news is coming from guidance which is looking at a 28% growth rates and a major turnaround expectations from BFSI sector and digital sector expected to grow. They are expecting an EPS of 150 and they have also announced a 1:1 bonus shares. So expect TCS to get more demand as price becomes more affordable. So for us IT is the only good news while everything else looks worrying.
Derivatives Action
On the derivatives front, things are picking up on the futures front as the overall long positions going up to 38% from 36% seen at the beginning of the day. Traders are betting on Nifty holding 10460-10500 zone and going up to 10600. So any dip towards that is seen as an opportunity to enter into a long position and make money. The options data is also turning bit bullish with more puts coming into picture than calls. The Nifty put call ratio goes to 1.63 from 1.60 seen at the beginning of the day yesterday. 10500 put saw a maximum open interest build up of 5.9 lakh contracts and 10600 put is also coming into play with 3.8 lakh contracts built there. 10600 call has 2 lakh contracts. So at 47 rupees premium 10650 is the roof for the market at 40 rupees premium for 10500 put 10460 can be the floor.
What is the Nifty and bank Nifty call for the day?
A flat Asia means India is likely to open flat with a slight negative bias in the range of 10540-10550. If you have take a short position yesterday above 10550 you can expect your positions to hit the target of 10480-10500 levels. There will be buying happening as the Nifty moves towards 10500 or breaks it. So, exit the positions as soon as 10500 is reached. For those who dont have positions wait for my tweet before going further.
Bank Nifty is a different story than Nifty and might react more to MPC commentary and Govt’s disagreements on lending. If Bank Nifty opens around 25050 levels then you need to watch out for the 50dma which is at 24950 levels and see whether it holds or not. Wait for my tweet before taking any position there.