Global markets are on the roll. Dow crossed 25000 mark today just like NASDAQ crossed 7000 and new highs are being made on the daily basis. The only worry is the Brent crude which is still above 68 mark which is a worry for India. But that apart every market across the globe is celebrating. Trump came and took credit for taking Dow to 25000 from 18000 odd levels it was in when he came to power. Now he is even talking about 30000 level for Dow coming sooner than expected. The rate at which it is rising everyday, looks like 30000 is coming by the end of 2018!
Another big celebration is the way Japanese markets rising. Nikkei is now crossed 23000 mark and the last time it went to that level was in 1992 and 1993. So, this is the highest level that is seen in my life time. All this means India should also get some rub off!
Domestically we have some things going positive. Bond yields are receding and Govt gets Parliament approval for 80,000 Cr for bank recap bonds through the bonds that are going to be issued soon. So, now the demand will again shift back to bond mark.
The other news is the advanced estimates for this fiscal year’s GDP that will come after market hours today at 5.30pm. The consensus of the market is between 6.6-6.7% for FY’18 GDP. We had a 5.7% and 6.3% in the first half and that is an average of 6%. To achieve 6.6% also, we need to grow at 7.2% in the next two quarters. Getting a 7.2% growth in Q4 is easier because the base is low as Q4 last year was majorly affected by demonetization. Q3 is going to be tough because last year Q3 we grew at 7% and we need to touch the same level this quarter. That 7% we got last year was majorly due to Govt spending and this quarter Govt is facing some stiff fiscal targets.
But the November data we got suggests Govt has spent money which is indicated by fiscal target reaching 112% by November. So, if we get a 6.6% or above figure, markets will celebrate. Any figure below 6.6% will create some disappointment.
Futures and Options
On derivatives front, there seem to be some action now in the put side. The Put call ratio again crossed 1.5 and went to 1.54 by the end of the day from 1.48 seen at the beginning of the day. It was possible primarily due to shorting of puts that happened at 10500 and 10400 levels. 10500 put was at 120 rupees yesterday and that means 10380 is the floor for the market. 10400 put saw maximum action as it was around 90 rupees and at 10310 cut off it is less riskier and more popular. On the call side, there was lot of unwinding seen at 10500 call as Nifty was racing towards 10500 levels.
A whopping 4.2 lakh crore positions were unwounded yesterday at 10500 call and 2.6 lakh contracts were unwound at 10600 call. That pushed 10500 premium by 27 rupees and 10600 call by 17 rupees. Some call buying also started at 10700 call.
What is the Nifty call for today?
For the first time ever in 2018, Nifty closed above 10500 and that has put to rest any debate of a fall below 10500. The long position you took at 10440 to 10470 level with a target of 10550 will most probably be achieved today. Nifty will open positive above 10500 close to 10520 level and there it might encounter some resistance. If that is taken out then 10550 is the next stop and you can exit the position as soon as it is reached.
Any dip can be taken as an opportunity to re enter again with 10700 as the target which will be achieved. You can re enter again close to 10500 levels. I suggest you to have a long position in Nifty futures to take you to Monday. How you do it is your call!