Finally, the Election Mahotsav arrives. The 7 phase polling that we would see for the next 38 days is going to be breath taking with strategies and counter strategies by the ruling party and the opposition. All in all, we are going to see the most crucial election in the recent time, crucial than the one which happened in 2014, which incidentally was my first election and the first time I cast my vote. The global markets are not looking that positive as Dow closed flat last night and all Asian markets are in red especially the Hong Kong which is down 200 points and Japan down 150 points. Brent Crude is still above 71 dollars and that continues to be a big worry.
Coming to domestics, market movement today will completely depend on how the first phase goes today. Farm distress, jobs and national security are the major issues that we are facing in this election and the first phase today is mostly concentrated in South India. 44 out of 91 seats, which is roughly half of the seats going to polls are from South India, especially AP and Telangana. 60 out of the 91 seats are the rural seats and what rural south India thinks about Govt is important. As such BJP has very less stake in the south and out of these 44 seats in South BJP holds just 4 of them. But things are different in other 47 seats of North, Northeast and Western India. There out of 47 seats BJP holds 34 seats so it is extremely crucial that BJP should try to hold many of them. The big challenge is the 8 seats in UP where BJP holds all 8 of them. All these are from western UP and with SP-BSP-RLD combine, BJP is facing a united opposition.
On the derivatives front, as Nifty fell close to 90 points yesterday, on the slew of bad news for BJP starting with the Supreme court verdict, there was selling that happened in the Nifty futures market. The Nifty long positions which fell to 67% have now fallen to 63% at the end of the day. In the options market, however, the demand for the call continued and the Nifty put-call ratio fell to 1.33 from 1.42 mark seen at the beginning of the day. Today is the Nifty weekly expiry and if we look at the open interest positions, 11500 put has the highest open interest, compared to 11600 put yesterday and 11700 call has the highest open interest. Right now Nifty is at 11584 which is almost the mid point.
What is the Nifty call for the day?
A red Asia means we will also open in the flat zone around 11580-11600 mark and as the options positions indicate today could be a day of volatility where market can test 11500 mark and even might go to 11680 mark. Much of it depends on how the elections of the first phase go, especially in Uttar pradesh and Maharashtra. Yesterday, you would not have taken positions, considering the fall and the volatility that Nifty has shown. If you have not taken a position, its good and do not go for any fresh position now. But if you have ended up taking a position then all that you need to do is to hope that you get a sharp up move above 11650 mark so that you can exit that position. Today is election as well as expiry so its time to wait and watch.