Markets and News

Back to Hyderabad, the summer has definitely set in and even the market is slowly starting to sizzle. Yesterday saw a big rally of 130 points in India and US seems to have caught the trend and Dow went up by nearly 700 points on the back of receding fears of trade war and things falling in place with respect to Facebook. Asia is also looking green today with Hong Kong up over 300 points and Brent Crude also remains above 70 dollars which might not really go well in otherwise great cues globally.

Domestic Cues

The great news is coming from domestics, where Govt has announced its borrowing programme for FY’19. That comes at 22% lower than the previous fiscal. In FY’19 Govt borrowing is likely to be 2.88 lakh crore for first half vs 3.2 lakh crore in the same period in FY’18. That is a great news for the Bank Nifty. One more positive coming is that most of this borrowing will happen in 1-4 yr bonds, which wew newly introduced in the market. Otherwise we have 5-9 yr, 9-15 yr and 15+ year bonds. 9-15yr bond accounts for 55% of the total borrowing. This is not a popular way of borrowing because banks actually make MTM losses and now with Govt announcing that 20% of borrowing will be in 1-4 yr bond its a great news. Another great news is 9-15yr bond borrowing is likely to come down from 55% to 28%. This is a great news which will push bank nifty higher and also with it many NBFCs and other related companies will go up. The mild negative news is more cess imposed on diesel cars and with high crude price ,auto and oil sector will have some pressure.

Derivatives Action

On the derivatives front, roll overs have started for April series and we have seen 35% of roll overs for the April series in futures market. There are still some short positions being taken at the higher levels and initially when Nifty touched 9950 levels and the overall long exposure is now at another record low of 33%. In the options also there was a recovery in put positions during the afternoon in otherwise a call dominant market in the beginning. The Nifty put call ratio is now at a healthy 1.15 mainly due to put shorting which increased post noon. The maximum open interest is stacked at 10000 put and 9950 put and together thay account for over 20 lakh contracts while 10100 call saw maximum open interest unwinding and 10200 and 10300 are emerging as popular calls to short.

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

Today is the day that belong to bank nifty with the govt’s borrowing plan which will put great demand to bonds and that will help the banks. There is a likelihood of bank nifty opening at 24400 and it is better to wait for a dip before going for a buy. Even if you get a slightest dip also around 24350-24400 levels should be used to go long with 24600 as the intermediate target and 24850 as the long term target. You can take this positions in the April expiry instead of March.

On the Nifty front, we might open around 10180 levels which is the 200dma and now what happens to that needs to be seen. If there is a steady move towards 10200-10220 then it is better to go long with 10260-10280 as the target. If you are looking at April then go long with 10300 as the target. Long is the word that is going to help now in this market.