Markets and Makers!!

First the Fundamentals: BJP is gaining slowly the lost ground in Gujarat. That is a big positive. With another 4 weeks for the results this see saw battle will be closely watched. Second is the global rally, which is on fire with Europe, US and Asia all markets in green, there is a lot of buying happening world wide and India will not be left out of the rally. The third good news is the month on month increase in GST collections. Compared to August, September is seeing a huge jump in tax collections and that is a good news for the economy. Fourth is the stabilization of bonds. 10 yr is now at 6.89 for two days and that means we can now seeing that yields will move away from those 7% yields.

Macro worries!

Now for the bad news. Crude oil is back to 63 dollars and that is not going to be a great news. Second bad news is Govt warning all the FMCG companies to pass on the benefits of GST to consumers. From 15th Nov many FMCG items were brought down from 28% to 18%. That means there is a possibility of 10% cut in prices and till now FMCG companies have not done. So, Govt stepped in and wrote a strong letter to all FMCG companies that if they don’t pass on the GST benefit to consumer then strict action would be taken against them.
Now Govt is also planning to write to restaurants to reduce their rates on their menu cards since items are available at cheaper costs. so, subsequently eating out will be cheaper for you but restaurants have to settle with less profits. In the near term its not a good news but in the long term it’s a great news. That means FMCG and restaurants will have some negativity, which can impact NIFTY.

Futures and Options!

On derivatives front, yesterday was a typical bullish day with long positions built on Futures and shorting of puts back in action. The long exposure in NIFTY futures is at 52% today compared 50% yesterday and that means a bullish trend. Another big positive is the movement of put shorting from 10200 to 10300 and 10350 puts. Lots of shorting happened there. On the calls side there is some strange thing happening. 10300 and 10500 calls are seeing unwinding. 10300 is understandable because 10400 is almost on its way but unwinding 10500 call yesterday means that there is a belief that 10550 will be crossed this series itself. That is a lot of bullishness. All that means that NIFTY put call ratio settled at 1.30 at the end of yesterday from 1.23 seen at the beginning of the day.

What is the NIFTY strategy for today?

If you went long yesterday at 10330 levels today you will see it going towards 10400. There is a resistance at 10380 and if it’s overcome then 10400 can be achieved intraday. The open will be positive around 10340-10350 range. The 20 day moving average is at 10320 and if that is held today then we will see 10400. The last bit of support in case if there is a fall will happen at 10280 levels.