News and Markets!

Finally, the weekend is here. The cues are mixed. The big fundamental that will be the bankruptcy ordinance that was signed by the president. It will be a slight negative for banks in the near term as it puts pressure on big borrowers. The fear might drive away some borrowers from borrowing and that would make things bit tight for banks in the near term.
So, I am expecting a tough day for the banks but if they can digest the news then we can have a up move possible on banks and bank NIFTY.
Another big fundamental that can act is the S&P is going to come up with their ratings revision now. Today S&P will declare their ratings and if they keep India where it is, its going to be a neutral reaction. If they give an outlook upgrade from stable to positive but keep rating at BBB- then it will be mildly positive. If S&P upgrades India to BBB from BBB- then it’s diwali for markets and 10500 is here. See what happens today!

Futures and Options!

On the derivatives front, interesting things happened here ahead of S&P upgrade. There was buying on NIFTY futures seen and the long exposure now stands at 55%. On Options front, there was unwinding seen at 10400 calls and buying seen at 10600 call and put shorting was seen at 10350 and 10300 puts. What does all this indicate? Looks like some FIIs and DIIs already have an idea that S&P is going to do something big. That is why call unwinding was seen at 10400 levels. 10600 call buying is also because of that the premium would rise and they are hoping to cash in on that. 10600 call is just 5 rupees now. Buying that would give you huge huge profits if NIFTY goes up. The put call ratio is at 1.35 now from 1.32 and volatility fell 1.3%.

What is the strategy for today?

NIFTY will open flat around 10350 levels and might move in the range of 10320 to 10380. Accumulating long positions for next week is an option that you can go for. I would still suggest buying 10600 call if you are going short on NIFTY for a hedge. 5 rupees is a small amount and if 10500 is reached because of S&P upgrade you can probably double or triple your investment. But CAUTION: This is based on a fundamental news and it could go anyway! So, be careful!!