Markets and News!

Tuesday starts on a cautious note after the big fall we saw in the last hour yesterday. Many put the blame on long term capital gains tax as a reason for the fall. But honestly I dont think that is the reason. It was few traders who on the low volumes have brought the NIFTY done. So as of now there are no serious worries for Nifty. But the fundamentals we have are mixed.

Following are the fundamentals that may come into play today.

1. The crude crossed 67 dollars and as we are approaching 70 dollars for crude things might get ugly and sell off might happen at anytime.
2. The core sector data comes at 6.8% for November. Cement on the low base sees maximum growth, steel out put is constantly rising, indicating demand creation. The only worry is stagnant growth in electricity generation.
3. The auto sales data for December is a mixed bag with two wheeler companies doing better than four wheeler.
4. The 10 year bond yield is rising and now from 7.35% its marching toward 7.4% which is also a worrying sign.

Futures and Options!

On the derivatives front, yesterday 10300 put saw some writing and the premium of 65 indicates 10235 as the firm base and on call side 10600 call saw writing as call writers were eager to eat 100 rupees premium there. For now 10700 is seen as a firm resistance. The NIFTY premium is at a very high 63 rupee due to sharp fall in the spot value of nifty in last 1 hour. The NIFTY put call ratio had come down to 1.56 from 1.62 seen yesterday. Today you need to forget this derivative cues as most of it got upset by yesterday’s last hour move.

So what is the NIFTY strategy for today?

NIFTY will open gap up today, around 10480-10500 levels and if you have still kept the long position taken at 10480 last Friday, keep it going and you will surely reach the target of 10550  today. Infact NIFTY can go as high as 10580 today. So, you will surely get your 70 point profit. If you have exited that position fearing loss, no worries, take a long position as soon as market opens and look at a target of 10550-10580 levels. Today will be a very good day for NIFTY and yesterday’s fall is just a one off event.