Markets and News!
In no time we have approached mid week. Things are settling down and slowly looking up. The trust that I have on the markets that they will go up seems to be finally setting in. Though its too early to say, we can in a way conclude that the January rally that we eagerly look forward to finally seems to be here. The big fundamental news yesterday was the all time highest sales of commercial vehicles, manufacturing hitting a 5 yr high is definitely good indicator. Cement and steel production going up in November also adds to the belief that economy is on the road to recovery.
On the global scenario also things are looks better. Crude prices have fallen a bit and Brent crude is around 66 dollars now. US markets had a big rally yesterday with NASDAQ crossing 7000 mark for the first time ever. The rupee is strengthening and now its around 63.5 dollars which is very good news for crude imports. The only worrying sign is bond yields which are still at 7.4% area. Asia is also looking bright and green and all that means lot of positivity to Indian markets to start with.
From the Dealer Desk!
On derivatives front, action seems to have shifted to call side more than put side. Two things happened yesterday. First was there was more selling on Nifty futures than buying pushing the premium down from 63 points to 30 points. Second the overall long positions in the market dipped to 67% from 71% seen on new year day. Some shorts are building up in the system and that is good in the long run. On the options front, calls are slowly becoming attractive instruments to short as the premiums are very high.10600 which has 65 rupees premium and 10700 call with 35 rupees premiums are favourite shorting candidates. They have the 2nd and 3rd highest open interest. On the put side 10400 and 10300 is being shorted both have 104 and 72 rupees premium respectively. The NIFTY put call ratio as a result dropped to 1.50 from 1.56.
What is the NIFTY strategy for the day?
Expect a mild positive opening for NIFTY above 10450 levels and first bit of resistance will come at 10500 levels. If that is taken out then the next target is 10550 but for that to happen 10500 should be taken out in the morning itself. Otherwise NIFTY will gravitate between 10450 and 10500 and might close in that range. It is better to keep the long position you had taken at 10440 or 10470 level with the target of 10550. This week we might achieve the target. If luck favors then it might happen today itself. Otherwise buying a 10500 which is at 106 rupees with a 120 to 125 rupees intraday can be tried as today is likely to be a green day.