Markets and News!

A different day to welcome after a great day yesterday. More than equities today the focus is the bonds. There was a massive sell of on bonds yesterday led by US and preceded by Europe and succeeded by Asia. The US 10 year has crossed 2.7% and rarely the yields go that high. The result is the tumble in the US markets which went through a drop. Asia also has opened in red today with both Japan and Hong Kong markets trading in red. Brent crude is still hovering around that dangerous 70 dollar mark. But the worry is about bonds than anything else.
Coming to domestics there are some worries coming from different quarters. There is a worry about inflation, Q3 numbers are slowing down but the major set of worries comes from the annual economic survey tabled in the parliament yesterday. Markets took the positive news of 6.75% GDP this fiscal and around 7.5% GDP in next fiscal but as you go through the fine print there are some definite worries coming out. First is the danger of crude oil going towards 80 dollars which could increase the fiscal deficit and might cost us more in imports. That would mean the GDP getting affected by 0.4-0.6%. The second is the climate change affecting agricultural sector and not much hope is given for the sector. The third and the biggest worry is Govt saying that the bull market might not last long. Here market should worry more about the actions of the Govt which could end bull market rather than its ability to predict market movements.

Some more Q3 earnings are slated for today and here are some.

1. Blue dart
2. Godrej Consumer
3. IFB industries
4. IOC
5. JK paper
6. Oberoi Realty
7. Sankara build pro
8. TVS Motors

Derivatives Action

On the Derivatives front there has been a consolidation that happened in the futures and bank nifty futures. Since yesterday afternoon there were some short positions taken on both the indices and that saw a fall in Nifty as well as bank nifty as the day came to the close. On the options front there was a massive put buying seen at 11000 level and put saw almost 4.9lakh contracts. The 12000 call also saw some buying hoping that the market will go up to 11500 also in next 10 days which might push up the premium there. It added nearly 3.7 lakh contracts. The big worry is the buying happening at these extremes. Any volatility on one direction might affect the market severely. The Nifty put call ratio is at 1.44 now up from 1.42 seen yesterday.

What is the Nifty call for today?

Expect a flat to slightly lower opening for Nifty around 11100 and the immediate challenge is where the market goes from there. If it falls below 11080 then we might test 11050 intraday. On the upside crossing 11100 might keep the markets around that level and 11130 is a resistance to watch out for. It is better to stay out of Nifty and watch the market before doing anything rash. Big events are coming up and slight caution is necessary.

What is the Bank Nifty call for the day?

I expect Bank Nifty to be under more pressure than Nifty today. Bank Nifty will open close to 27400 mark and what happens from there needs to be seen. Bonds will have a direct impact on the Bank Nifty and the 7.17% 2028 bond is at 7.44 and it is likely to hit 7.5% mark. If that happens then Bank Nifty will lose around 150 points. So, I would suggest taking a short position on Bank Nifty around 27400-27430 with a target of 27280-27300 as the target.