Markets and News – Crude Worries!
What was feared and I was talking about yesterday has come true. President Trump walks out of Iran nuclear deal and imposes sanctions on Iran. The only silver lining is UK and Russia which are the allies of US in this nuclear deal and not entirely with US on the decision to pull out. So, what should have been a disaster was stopped at a dip. US markets closed flat and Asia is in mild red and still trying to figure out what exactly is the impact of these sanctions. Dollar has strengthened and is approaching 93.5 and Crude which is much more relevant to India is moving towards 77 dollars which is a new high for 2018 and a 5 year high for the Crude.
Domestic Cues
On domestics, today the major factor for the markets is the double whammy of increased crude prices and depreciation of Rupee. IT sector might rally on weak rupee but many companies from Oil, Paints, Auto ancillaries and banks will have some impact on this. The one fundamental that can keep the market in positive mood is the tide turning towards BJP in the Karnataka elections. The Q4 results are also stabilizing with many of the Q4 numbers coming positive.
Following are the Q4 results expected to come today.
1. Eicher Motors
2. EID Sugar
3. Federal Bank
4. Hikal
5. Jindal Steel
6. Orient Hotels
7. Parag Milk
Derivatives Action
On the derivatives front, the worry of US imposing sanctions on Iran was weighing heavily and some short positions were taken in The Nifty bringing down the premium from 26 points to 17 points. However the mood is much more bullish in Options market with call buying starting from yesterday afternoon. Traders are expecting the Nifty to go up on election day and the dip in Nifty was used to buy calls that can give profits if Nifty goes up around election date. There was some put shorting also happening at 10700 put and 10950 call is getting a lot of open interest. So the floor for Nifty could be 10580 considering that 10700 put has 120 rupees premium and 11000 on upside considering 10950 call has a 45 rupee premium. The put all ratio rose marginally to 1.56 from 1.55 seen at the beginning of yesterday.
What is the Nifty and Bank Nifty call for the day?
Bank Nifty has met the given target of 26000 and even went to 26100 intraday. That means you could have easily mad 300-400 point profit on this. On Nifty I was suggesting you to exit positions considering the big fundamental coming today and it has come. If you are still holding the positions, no worries because you need to wait a bit more probably till Monday when markets will react to exit polls. If you have exited the positions, just wait and see how the day progresses today.
Re-entry or taking fresh positions is difficult onNifty today and we need to see if the fall due to sanctions will end or not. We do not know Europe reacts to Trump decision so we have to wait till 1.30PM to see how Europe reacts before we taking any positions. Bank Nifty will be weak today and if you want you can short Bank Nifty at the open around 26000 mark with 25850 as the intraday target. Wait for tweet for further updates.