Markets and News
After a green start to the day yesterday, today will start on a red note. US have triggered a fall with dow jones at one point in trade lost 750 points but recovered to close 450 points in red. S&P has officially entered the long term bearish territory by going below its 200dma. So, now we have a major global index below its 200dma. Last time S&P went there was in June 2016. The trader barriers on US by China continues and that is triggering some panic in Asia also which is in mild red today. Brent is giving some good news by trading at 67 dollars per barrel.
Domestic Cues
On the domestic front, there are some worries and some good news to cheer up. ICICI saga continues to worry everyone, but what could take out the worry a bit is the relief provided by Govt for the bond markets in terms of relaxations that could put bond markets today on further recovery path. 10 yr is at 7.33% now and we could see 7.25% being hit at some point in the trade today. If that happens then stock market will see some positivity. Added to this is the average core sector numbers of 5.1% that come in for February. The recovery is mild and still electricity and cement have a long way to go. But the good news is the auto sector numbers especially M&M which deals with rural India seeing very good sales. That clearly shows the revival of rural economy slowly. All this presents a mixed fundamental picture.
Derivatives Action
On the derivatives front, there was a lot of action in the futures market on the long and short side and the overall long positions continue to be at 18%. We cannot bet on a major recovery till there are enough longs built in the system. On the options front, the demand for puts continue to rise and the Nifty put call ratio went up quickly to 1.42 yesterday. This is primarily due to a 100 point rise in Nifty leading to the closure of lot of call positions. 10100 call saw 2.7 lakh contracts unwinding but 10200 and 10400 calls have seen a lot of contracts build up. 10200 saw 3.3 lakh contracts and 10400 call saw 3.4 lakh contracts build up. On the put side 10000 continues to be a popular put with 8 lakh contracts followed by 10100 put that saw 7.1 lakh contracts. Today might be a different day as we are starting down.
What is the Nifty and bank nifty call for the day?
The weak Asia and SGX Nifty suggests India will open again below the 200dma and what happens later needs to be seen. If the open is around 10160-10180 levels then immediately 200dma comes as a resistance. 10100 on the down side might be a strong support. I have a faith in the market that it will go up once it touches 10100 level. You already have a long position, and I suggest you to keep it intact.
Bank Nifty will be more positive than nifty today and 24250 might be a support. I suggest you to go long on Bank nifty with 24500 as the target when bank nifty opens down and goes to 24200-24250 levels. Keep the position till RBI monetary policy day.