Markets and News
Penultimate day to expiry, and things are looking very very bleak. Italy is the worry for the whole world. Italian results were like Karnataka results with no party getting a clear mandate to rule. Now with no coalition emerging to form the Govt, we are staring at a scenario where Italy might go to polls or a scenario where the coalition that comes to power might pull out of Euro. Out of the 630 seats in Chamber of Deputies Right centre party got 265 seats, Left centre party got 122 seats and Centrist 5 star movement got 227 seats. No body touched the 316 mark which is the majority. Even in the senate that has 315 seats Right centre party got 137 seats, Left centre got 60 and centrist party got 112. 158 is the majority figure. This is the reason why World is afraid of Euro. Yesterday Dow fell more than 500 points before recovering a bit and close at 400 points down. That prompted dollar index also to go up and its almost touching 95 now. That has put pressure on many emerging economies.
Domestic Cues
On the domestic front, the Crude prices have stabilized a bit and Brent crude settled below 75 dollars and that prompted Govt to reduce the petrol prices today after 15 days of continuous rise from 14th of May when voting completed in Karnataka. The Q4 results have also come to an end and things are looking slightly better than the previous Q4 results as well as the Q3 results. So, domestically things are looking positive but with global cues so negative these fundamentals have no role to play in today’s market scenario.
Derivatives Action
On the derivatives front, there is a massive change in the mood and sentiment in the later half of the trade as market started falling yesterday afternoon on Italian fears. Nifty went into a deep discount of 9 points and suddenly the rollovers from May to June shot up and ended at 30% now. These are on the back of low premium for Nifty futures. On the options front also the Nifty put call ratio dropped rapidly to 1.40 from 1.52 and it is again due to unwinding of positions on put side as market approached the 10620 level. 10500 put saw unwinding of 11.6 lakh positions.
What is the Nifty and Bank Nifty call for the day?
Asia has reacted very negatively to the Italian situation and every market there is down. As a result, Nifty also will open gap down below 10600 mark and what happens from there needs to be seen. 10490 is the floor for the series, as appears from the options data and it is better to go for short strangle at 10500 put and 10650 call and whatever is the premium will be tweeted to you once the market opens.
On the bank Nifty front, after a big fall, and the gap down expected, it is better to go for a long position on bank nifty intraday, but wait for my tweet for a clarity on this.