Cheer for New Highs!

I didn’t give my call yesterday due to health reasons, and am back today and looks like I have come at the right time to see NIFTY touching a new all time high of 10,500. No so long ago we celebrated 10,000 on NIFTY now its time to welcome 10,500. World looks a better place for equities and new all time highs are being made everywhere including India. Q2 results have been better than Q1. 30 out of 50 companies have declared their Q2 numbers and the average growth is around 6% with 70% companies either surpassing or meeting expectations and 30% companies falling short of expectations. It should serve as a slightly positive trigger for valuations. I would put this 6% slightly below par as we are expecting 8-10% growth.

Crude is getting Rude!

A big reason for worry however is the crude prices touching 65 dollars and this means lot of fiscal pressure on India if fuel is subsidized and larger import bill. That might upset the macro economic calculations a bit and another reason of worry is the rising bond yields. 10 year has crossed 6.90% and that’s a leading indicator that inflation is going to go up in the near future. This will surely put pressure on the equities market. For India crude is a big thing and crude prices going up will not do any good for currencies market or bond market and that will surely impact equities market.

Finally F&O!

On the derivatives front 10,400 is seeing maximum action with 1.5 lakh contracts generating. That is at 80 rupee premium and that means 10320 is seen by many as a major level of support. 10,500 call is also very active and am having a feeling that many people are buying this. But the real action is 10700 call that has 1 lakh plus contracts at 23 rupee premium indicating that expiry could go all the way up to 10720. This equality is put and call shorting and call buying at 10500 means Nifty put call ratio remained flat at 1.56 yesterday at close vs 1.55 seen in the morning.

What is the strategy for today?

Clost the long position taken at 10,420 levels at 10500-10520 range for a profit of 80-100 points and wait for an opportunity to take a fresh trade.

Q2 results scheduled for today

1. Adlabs
2. Balrampur Chini
3. BHEL
4. Castrol
5. Cipla
6. Hathway
7. Indian Overseas bank
8. Jindal SAW
9. Manappuram
10. Polaris
11. Tata Coffee
12. VIP industries