Markets and News

Mid week and things that got spoiled on the first two days got set right to an extent. Dow Jones yesterday moved 1100 points on either side to close positive around 500 points and that seems to have rubbed off on to the other Asian markets and Asia is all green today. Hong Kong is up 700 points, Japan is up 600 points and that means the worries are also left behind. US bond yields also have softened a bit to drop below 2.80 mark and that will be seen as positive. Another positive is the Brent crude which seems to have settled down at 67 dollars.

Domestic Cues

Coming to domestics, things seems to be moving more towards Q3 results and other macro factors in India. Suddenly, everyone started noticing good and bad Q3 numbers that companies have been delivering. Today is the monetary policy day and everything depends on the following 3 factors.
1. The tone of the policy: Do not expect any rate cut now and almost everyone is expecting a status quo and there are some who are worried about a change in the stance and there could be a talk of rate hike with a rare possibility of going for a rate hike of 25 bps also. If that happens markets will be extremely negative.
2. The inflation target: The inflation target is kept at 4.5% to 4.7% and with January inflation expected to come at 6% there could be a chance of revising the inflation target. If it is kept constant with a warning sign issued, market will not react much but if the inflation target is revised upwards to 5% or above then there could be a rapid sell off.
3. GDP for FY18: RBI has forecast a 6.7% GDP growth for this fiscal now everyone will see if RBI keeps it constant or revises to 6.5% level that CSO has earlier predicted. Any downward revision of GDP or GVA will impact negatively for the market.

Following are the Q3 results expected today.

1. Aurobindo Pharma
2. BEML
3. Cipla
4. Dalmia Bharat
5. Eicher Motors
6. EID Parrys
7. Gati
8. Green ply
9. Hexaware
1o. IRB
11. Polaris
12. Quickheal
13. Sharp
14. Spice Jet

Derivatives Action

On the derivatives front, there were lot of changes yesterday in the futures market. In the market we saw lot of shorts in the system but by afternoon more longs started appearing. On the options front also there were unwinding of positions started at 10900 call where 8.6lakh contracts were unwound. 11000 call also saw 4.6 lakh contracts unwinding. 10500 call was active with both people shorting and buying it creating 15.1 lakh contracts. On the put side 10300 put was very active with 11.7 lakh contracts and that puts 10200 as a firm floor for this series 10500 put saw 12.1 lakh shares unwinding as put shorters panicked and covered their positions. The put call ratio remained stable at 1.13.

What is the Nifty and Bank Nifty call for the day?

The green across Asia means Nifty will have a big gap up today and it might open close to 10600 levels and 10540 is the 50 dma and that might offer as the first bit of support and on the upside 10670 might act as resistance. The monetary policy might see some volatility and if the policy is bad then 10540 will be broken otherwise it will take support there and move upward. so, it is better to see monetary policy and then take a long position at 10600 level with 10670-10700 as the target.
On the bank nifty front, it will be even more volatile than Nifty and it might open today at 26200 level and 26500 seems to be the immediate target for it. Carefully watch the bank Nifty and you can take a long position there also around 26300 levels with 26500-26600 as the targets. HDFC bank will be one more stock where I recommend long positions