Markets and News

First trading day of the new financial year 2018-19 and we are starting on a lot of hope and expectations. We are off for 4 days while globally it was a 3 day weekend. US markets have ended positive on Thursday and nobody knows what are the cues as the weekend was too long. China has announced today morning tariff increase on some US products thus triggering a trade war officially at the beginning of the quarter. The Crude has picked up at its at 70 dollars as the amount of drilling dropped in middle east creating a short supply in crude thus leading to the prices going up.

Domestic Cues

On the domestic front, things are not as bright as what global scene looks like. The big news is the ICICI bank’s Chanda Kochar being in controversy of giving loans to Videocon. All that has happened is Videocon Industries made a lot of investment in Chanda Kochchar’s husband Deepak Kochar’s company. In return Videocon got a lot of loan from ICICI bank. Another news that is worrying is RBI’s disappointment in re appointing Shika Sharma as the head of Axis bank. So both ladies who were pride of India are in controversies now. ICICI has 16% weightage in bank nifty and all this will have some impact on bank nifty.

Coming to the other cues seen in this month, we have RBI monetary policy coming this week followed up by the Q4 results of companies that will start pouring in from next week onwards and if we look at the last 3 years April 2015 saw a fall of close to 1.9% while April of 2016 and 2017 saw a 1.6% and 1.8% growth for the month. But the catch is, all the 3 years April followed the trend in March, that means if March was positive April is positive and if March was negative, April turned out to be negative. So, this year we had a fall in March so its fingers crossed. If the fall happens from this level we can see 9700 levels getting tested this series.

Derivatives Action

On the derivatives front, we are starting the April series with roll overs of 67% which is slightly more than the previous month. The most alarming part is the net long positions. As of now the Nifty April futures long exposure is just 18% which I think is this decade’s lowest probably or could be the last 5 year lowest. On the options front also puts are more in demand than calls and Put call ratio is at 1.35 to start with which is very heavy to start a bearish series. 10500 call has the maximum open interest on call side and 10000 put has maximum open interest on the put side. So, a long straddle at 10200 level will help? You should look at it now.

What is the Nifty and Bank nifty strategy for the day?

Nifty will open positive today due to global scenario and the open will be at the 200dma of 10180-10200 levels. What happens from there needs to be seen. Domestic factors are not looking very positive and that might stop Nifty from crossing 10220 levels, but if its overcome then 10300 is on its way. So, hold on to your position taken on Wednesday for April series with 10300 as target.
Bank Nifty is a different story. The 200dma of 24800 is very far and bank nifty has no legs to cross that at least today. Just wait and watch. dont rush into any positions.