Today will be remembered for the biggest ever reform in modern Indian economy, Demonetization.

We celebrated that in a way by falling 100 points so today should be the day to go up. The main culprit was yesterday’s fall is the Crude surging ahead getting past 65 dollars. I wondered how I missed factoring in such a fundamental. Sometimes, things are right in front of us and we fail to see them clearly.
Now Crude has suddenly cooled off and trading at 63.50 dollars and does that mean we will gain 100 points today? It’s not that easy. Markets are never linear. The macros still seem to worry as rupee crosses 65 per dollar and bond yields touch 6.93.

On the derivatives front, yesterday saw a major shifts that we have not seen in many days. I will list a few for you.

1. First time in many months, DIIs sold 2000 Cr in cash market, though FIIs bought 460 Cr in cash market. This is primarily due to the fear that Crude will go to 67-68 and hell will break loose. But that did not happen. Now what DIIs do today needs to be seen.
2. On a day when NIFTY was falling, the NIFTY futures premium went up from 32 rupees at the beginning of the day to a whopping 60 rupees at the end of the day. Increase in premium indicates demand and buying and lot of buying in futures is an indicative of short term bullish trend.
3. If you are buying futures, what would you hedge it with? The answer is buying a put. There was a huge buying of puts that was seen yesterday especially at 10400 and 10300 levels. This would offset for any adverse direction that NIFTY might take today.
4. On the shorting front, calls were very much in demand with 10,500, 10600 and 10700 calls continuously being shorted. Now the 10500 call shorting has picked up and it generated a whopping 2.69 lakh contracts. Put shorting was relatively small and was seen at 10,100 and 10,200 levels. The put call ratio dropped rapidly due to that from 1.55 to 1.43.

What is the NIFTY call for the day?

The opening will be flat and all those expecting a gap up will be disappointed. Observe the market before jumping in. Let the futures premium stabilize before entering again. There is no room for shorts but long position should be taken only after premium comes to 40 rupees range and NIFTY showing some stability at 10350 levels. The last support is 10300. Breaking that is a dangerous signal. The close might be flat to positive with 10380 and 10400 as resistances.

Q2 results for today

1. Ashok Leyland
2. Bharat Forge
3. Bombay Dyeing
4. EID Parry
5. Green ply
6. IRB infra
7. JK Lakshmi cements
8. Muthoot Finance
9. NDTV
10. Pidilite Industries
11. Shree cements
12. Snowman Logistics
13. TTK health
14. Thermax
15. Voltas