Finally, we had a green close on Friday, after hitting an all-time low for 2019. The rally came on the rumour that Finance minister is considering a re-look at the tax rate on FPIs and that still remains a rumour. So, this has the potential to push the market up at any time if other things are positive.
Globally things are looking very weak with Dow closing on a negative terrain on Friday losing close to 100 points and today morning also the Asian markets are in deep red and the reason is familiar and that is the trade tensions between US and China. Another reason is the services data from China which grew at 51.6 vs expected 52.0, which is a 5 month low. That has pushed all the Asian markets down with Hing Kong losing more than 650 points and Japan down by 500 points.
On the domestic front, Kashmir is the big thing in everyone’s mind today. The trouble started on Friday when Govt gave an advisory to recall Amarnath Yatra for the first time in 30 years and that triggered to panic. Added to that Govt over the weekend has asked the tourists in Gulmarg and other places to evacuate and asked all the students outside to leave Kashmir.
Panic started and that reached a peak when Govt last night has put Omar Abdullah, Mehbooba Mufti and many Kashmiri leaders under house arrest and imposed Section 144 in Srinagar and other places in Kashmir. There is a cabinet committee meeting at 9.30am and then BJP asked all its MPs to be present in Parliament, which indicates that something big is likely to happen either today or tomorrow.
The other news that will make an impact are the Q1 results and the news is not as bad as we have expected to be. Bata came up with a good set of numbers with 10% growth in revenue. The other good news is from Q2 results of Nestle which reported a good India number where the revenues have gone up and this is primarily due to the fact that 75% of Nestle’s sales comes from urban India.
Also, we had ITC which reported a decent set of numbers with 6.6% volume growth in FMCG which comes as a huge relief for the company. The only disappointment is SBI which disappointed the market with higher slippages. Now we are reaching the end of Q1 results season and Pidilite Industries and Titan are going to come up with Q1. Another macro trigger today is the MPC meeting starting today.
On the derivatives front, there was a recovery on Friday but that did not stop the FIIs from selling and the FIIs sold more than 1000 Cr in the F&O market and that has brought down the Nifty long positions in the futures to 27% from 28% and am now wondering how much low it can go.
On the options front, there was almost equal demand for both puts and call and the PCR went up marginally to 1.18 from 1.16 mark. For the 8th August expiry 10900 put added 6.7 lakh positions while 10800 put added 4.8 lakh positions. 11000 put still has the highest open interest on put side at 17 lakh contracts. On the call side, 10900 call added 3.7 lakh positions followed by 11100 call that added 3.6 lakh positions and 10950 call that added 3 lakh positions. 11100 call has the highest open interest on the call side.
What is the Nifty call for the day?
Friday was a very volatile day with Nifty going all the way down to 11850 from 10980 mark and then recovered from there and went up more than 250 points to 11080 mark and then closed below 11000 mark. Today is going to be a nervous day with Kashmir and happenings in the parliament going to make a huge impact and we can have swings based on news. Friday’s low of 10850 will be a support and we will open at 10900-10920 mark and a fall might take us to that 10850 mark.
If we find support there then we might go back all the way to 10980-11000 mark and positive news might take us to Friday’s high of 11080. So, the strategy for the day is if 10920 holds then go for a long position whenever you can, depending on the news with 10980-11000 as the target. This can be today or tomorrow. Bur make sure you go long only if 10920 holds after the fall and recovery.