After a great start, when we all thought that we might escape a fall and close at 10700 level we saw the classic last hour fall of nearly 120 points that took Nifty to below 10600 and due to the averaging of values we closed just above 10600 mark at 10604. This marks the 8th consecutive fall and we have not witnessed it for a long time, not in last 4-5 years! Are we going to see another one today or is the pain over for now? World markets are mixed with Dow Jones closing totally flat with a gain of just 8 points while Asian markets are showing a lot of positivity with Hong Kong up close to 350 points and Japan up 150 points and other markets in 0.5 to 1.5% up.
On the domestic front, Crude seems to be emerging as a worry as Brent is now at 66.5 dollars. This will put some pressure on the rupee and in the domestic market also the petrol prices are being revised on the upside. Last 4 days saw 60 paise rise in Petrol prices in Hyderabad and Petrol now stands at 75.34. On the macro front, GDP figures are going to be out in a week’s time and going by the Q3 results things look bleak and there is a fear that GDP which grew at 8.2% in Q1 is likely to drop below 7% in Q3 and that will act negatively on the market. On the political front, the developments on Pulwama and the political statements that the leaders make will have to be watched very carefully.
On the derivatives front, yesterday was the story where neither in futures nor in options we went anywhere. The Morning saw a lot of buying in Futures but everything changed as Nifty started to fall. The long positions still remain at 45% and the Nifty put call ratio fell a bit to 1.11 vs 1.13 seen at the beginning of the day. This is a level where puts will get demand and that means markets should go up. Tomorrow is the weekly expiry of Options and on the put side 10600 has the maximum open interest and 10800 call has the maximum open interest which means that there is some scope for a rally. On the monthly contracts however 10400 put and 11000 call has the highest open interest. 10700 put and 10800 call are also gaining open interest and we need to watch them.
What is the Nifty call for the day?
Yesterday, if you have thought that you missed a good chance to make money, you would have heaved a sigh of relief by evening that your money is safe in your pocket. This is the nature of the market now and taking risks comes at a huge cost. With a 10670 open and 10710 seeing selling you really wouldn’t have any chance to enter or exit. Today we will see a positive start again due to positivity in Asia at around 10630-10660 levels. What happens after that needs to be seen. If 10620-10650 range is protected in the first hour, then take a small risk and go for a long position with 10700-10720 as the target, whenever it comes. You might take it to tomorrow also if targets are not met today. Make sure that your entry point is between 10620-10660 mark so that the profit you get is meaningful and take this position only if 10620 is not broken. If it is broken, and Nifty goes below 10580 then stay away.
On the 14th of Feb 2019, the day recognised to be celebrated as the day of ‘Love’ turned out to be a Brutal and a Horrified day for 1.3 billion Indians. The terror attack in Pulwama district in Kashmir carried out by the Jaish-e-Mohammad terrorist killed more than 40 CRPF Jawans. It was an attack that left the entire country speechless and pushed every Indian into an emotional tailspin. People across the length and breadth were demanding for a befitting reply and the one thing that was common in everyone’s mind is ‘Revenge’. Govt has given a clear indication that it would act tough and vowed to pay for every drop of blood that the martyred Jawans shed.
Entire World is also moved by this attack and as many as 60 countries have come out in support of India and have sent a strong warning to Pakistan. UN has also strongly condemned the attack and urged for punishment to those who are involved. USA and Trump have gone on to say that Pakistan must stop the funding and supporting the terrorists on their soil. These were few opinions of Leaders against Pakistan in the last 3 days since the attack happened.
India in the wake of this attack has withdrawn the Most Favoured Nation tag to Pakistan, Movie artists association banned the Pakistani stars from being a part of the Indian entertainment industry and the customs duty on Pak imports have been raised by 200%. Apart from this Social Media is on full trolling of the Pakistanis. Pakistan is under pressure and PM Imran Khan had come out after 5 days to say that Pakistan believes in peace but will not keep quiet if it India attacks it. India made it clear that it is not in war with Pakistan, but with the Terrorists who are supported by ISI. If the world is raising questions at you, then PM Imran Khan you must do something about it and not ask for proof which actually is visible right in front of him. It must condemn the attacks and start an operation to find the terrorist groups in their soil, and hand them over to India.
If that’s how the things are across the Border, internally also things aren’t that fine. India did conduct an operation to clear the cockroaches who planned the Pulwama attack. Indian army was successful to eliminate the cowards and Jihadi JeM terrorists, though unfortunately, we lost 4 of our soldiers, taking the toll of death of Jawaans to 44 in last week. Indian army is yet not finished and is up to something big to clean the terror that is taking the lives of innocent.
But unfortunately, the democracy in India is making people to talk anything that they wish which is unacceptable. Sidhu, who is a former cricketer and now the MLA from Punjab is asking the people of India why should the entire country be criminalised for the 4 terrorists? Media personnel, especially the journalists are raising alarm for the Kashmiri Youth and creating unwanted panic in them. One of the entertainment industry ladies asks people why are we feeling so much grief for the Army when there are many more others who die daily because of food etc;
What are these voices made of? How can one be so illogical against the country? Where has the unity of India gone in the tough times, even after all the political parties have taken a singular stand of punishing Pakistan and seeking for an act of revenge, why are some set of people still cursing and acting manipulative. People must stay united in these tough times to back the soldiers, the govt so that the problem can be handled the way the Country wants. Spreading false and scripted stories has become part of the DNA of these heartless people who are time and again continuing to support the anti-nationals and bringing violence to the Country.
This manipulation of facts has to Stop, hashtags like How’s the Jaish has to stop, Violence has to Stop, Terrorism has to Stop! If it requires a violent and drastic step against the terrorists has to be taken, then let it be. This is not the time to talk about peace and talks, because it undermines the very purpose and the sacrifice that those soldiers have made to protect our motherland.
Let us make a resolution to root out the terrorism forever from our soil and let’s continue this struggle till the last terrorist is gunned down.
Weekly Expiry for Nifty – A New Chapter in Equity Derivatives for India
Today’s post I will take you back to the controversial aspect in the Stock Market for the majority of Indians. We have already seen in the previous posts of mine on what are derivatives and how they are traded and also how they help the investors to cut down the losses.
Though that’s the main reason for
derivatives being introduced, the agenda has completely changed and we see more
traders than investors in today’s market. But let me tell you that the number
of traders that we see in our Indian Stock Market is much less when compared to
Stock markets like America, Europe, China and Japan. For your easy
understanding, India’s population contributes to almost 20% of world’s
population whereas the Indian Stock Market derivatives trading contribution is
at laughable 0.5% of 100%. That’s the fact which would hit us badly but that’s
Reasons for not trading are many,
some are technical while some are due to fear. There is no need to fear or
worry, derivatives if learnt properly is very easy and very profitable indeed.
Let me tell you the story of derivatives in just 3 simple points:
1. Unlike stocks, where one person’s
loss is another person’s gain, derivatives trading is something where everyone
can gain or everyone can lose. In simple terms, if you want to buy something
you need not have a seller and vice versa. So, in derivatives, if you feel that
you can make profits, everyone can buy and everyone will gain money. Thus
wealth is created in Options contracts of derivatives. Otherwise also in equities,
if we see the loss made by one person is the gain for another person. But the
derivates markets are different, here both the traders can make profits at the
same time. It’s because of this derivatives market that the world was able to
fund the internet and technological revolutions.
2. In Indian till last month, there
were monthly expiry Futures and Options contracts. And as we are in the
European options methodology, a trader has to wait for the end of the month to
close transactions and get the money into the bank account. This limits him
from trading very frequently and you would also have to wait till the last day
to get your money. But now from this week, Nifty weekly contracts were
introduced and the first expiry will happen on 14th Feb. Now the trader can get
the profit he made in his account every week and that is a major advantage of
weekly expiry. This will surely increase the volume of the contracts traded.
3. The Last point we need to look at
is why the derivatives are so low in India? It’s just 0.5% of the total volume
of derivatives across the World. Even in that, 90% of derivatives volumes come
from equities that mean other derivatives take just 10%. Whereas if we look at
the USA derivatives markets, in the OTC category 77% of the derivatives volumes
come from Fixed Income derivatives, 9.3% comes from Currency and 8.3% from
Credit, 3.5% from equities and only 1.3% come from Commodity derivatives. So if
we look at our derivatives it’s a complete monopoly, with no other instruments
able to pitch in and increase the derivatives contribution.
India has a long way to go. First, the volumes in equity derivatives have to increase, then other instruments like debt, currencies should be tried. Derivatives are simple and easy if you really want to learn to multiply your money, make a small effort of learning it because the future for Indian Stock Markets is Derivatives Market!
Aphalaakaangkshibhiryajno vidhidrishto ya ijyate;Yashtavyameveti manah samaadhaaya sa saattwikah.
That sacrifice which is offered by men without desire for reward as enjoined by the ordinance, with a firm faith that to do so is a duty, is Sattwik.
After talking about the food that a person in Sattvik, Rajasic and Tamasic state of mind eat, Lord Krishna in this shloka is talking about the sacrifices that a person who has the sattvik characteristics offers or performs. He says that a person when he is offering sacrifices should do it without any kind of a desire for any reward. He also has to do things that are prescribed in the scriptures with total and complete faith in God. The most important thing here is, he should believe that performing a particular sacrifice is his duty and that has been mandated by God, hence he has to perform it without a reward attached to it. Such kind of people are said to be of sattwik nature, tells Lord Krishna.
Extending Interpretation to Mankind’s Life!
We usually hear these phrases like “I have sacrificed my whole life for the sake of family”, “I have done so many sacrifices for you, is this what you give me in return”, “Life is full of sacrifices” etc etc. What is the meaning of sacrifice? English dictionary gives two meanings. In the noun form, it is “An act of surrendering a possession as an offering to a deity”, in verb form it is “giving up something valued for the sake of other considerations”. What Lord Krishna said in this shloka is the combination of both. Thus the meaning of sacrifice is “Any work/activity done for the sake of only God and giving up things that come in the way of performing such activities is considered to be sacrificed”.
Sacrifice is not a religious ritual alone. It is done for the sake of God by which the entire humanity gets benefited. Anybody who sacrifices his wealth for the sake of the poor is actually serving God. Anybody who sacrifices his own urges and wishes to work for the larger benefit of the people around him sacrifices in the name of God. Order of importance of looking at things plays a very important role in deciding for whom we are sacrificing what. For a Tamasic and Rajasic person, the order of importance is I, we, my family, my relatives, my community, my religion, my motherland and last comes the entire humanity.
But for a sattwik person it’s exactly the opposite. For him the entire humanity comes first, country comes next, followed by that religion, community, relatives, family, we and last comes “I”. A sattwik person gives more importance to humanity than to himself or his family. All his activities and rituals are centered around this concept only. Thus when a person works for the humanity, he never expects any reward for himself, but if he works for himself or his family, he always expects rewards and when those rewards don’t come he gets disheartened and abandons the sattwik path. But the person who is sattwik rewards for his work is never a criterion.
As we approach the middle of the week we are looking at a 125, 56 and 57 point cut in the last three trading sessions and that is a total 238 point cut. If we look at the Nifty on 1st Feb, which was also a Friday, we started from exactly the same level of 10831 and went up 238 points before correcting. So, from 1st Feb to 7th Feb we went up 238 points and from 8th to 12th Feb we fell 238 points. That puts us at a very interesting position of what is going to happen today. Global markets are positive with the US gaining nearly 400 points yesterday on the news that US Govt shut down is finally coming to an end. The feeling has rubbed off to Asian markets also today as they all are in a positive zone with Japan up 350 points and Hong Kong up 150 points. Brent crude is a worry as it’s at 62.8 dollars almost touching 63 dollars.
On the domestic front, we had the IIP and CPI data that has come yesterday evening and everything came in the range I gave. I said IIP will be between 2.2 to 2.7% and we got a 2.4% IIP for December. On the Inflation front, I gave a 2.0 to 2.4% range and we got 2.05% inflation for January. In that also I gave 5.4 to 5.7% on services inflation and we got 5.4% for the services sector. This is 19-month low inflation and food inflation is still worse at -2.17% and that is something we need to look at. On the Q3 front, finally, some good has come from Bata which declared a fantastic set of numbers. For the last 2 years, I was bullish on Bata and it continues to deliver. Coal India also surprised with good numbers and looks like some good news coming on Q3 front.
On the derivatives front, there was a lot of positive action on the Nifty futures front, where there was a lot of buying as the markets were correcting in the last hour of trade. The overall long positions now stand at 54% vs 41% at the beginning of the series. On the options front, however, there is a lot of demand for calls than puts. 9 calls were sold yesterday for every put sold and that took the Nifty put-call ratio to 1.35 from 1.47. For tomorrow’s Nifty expiry 10850 put added 1.1 lakh positions and 10800 put added 1 lakh positions. 10800 put now has the highest open interest now. On the call side, 10900 call added 8.2 lakh positions while 11000 call added 4.6 lakh positions and 10950 call added 4.1 lakh positions. 10900 call has the highest open interest.
What is the Nifty call for the day?
Yesterday, I advised you to take a long position only if Nifty goes below 10850 and holds 10820. This has happened only in the last hour of the trade so very few people would have taken positions. Nifty will open around 10840-10870 zone and the positivity might take Nifty to 10900-10920 zone. If it goes there, exit your long positions. You will still get a 60-80 point profit. If you have not taken any positions yesterday, today you might not get enough room to take long positions and make profits. So, I advise you to wait and watch if Nifty breaks the 10920 resistance or not and where the close happens. For today there is no trade in Futures.
NDA’s Interim Budget for India – Big Bonanza for every Indian!
It was on the 1st of February 2019, the stand-in union Finance Minister Piyush Goyal’s tabled the interim budget, which is the final budget for the country goes for polls. So many expected that it would be a lame duck budget. But the perceptions of those critics would have surely taken a backward leap after a highly rated budget presentation by the Finance Minister.
It really had to be nothing less than a 5 star budget for the people to regain the confidence in the Govt and bring back belief in the minds of the Indians which was otherwise slowly going down on the back of unapproved Jobs Data reported by Business Standard, the Ram Mandir issue and other issues relating to the Govt. People on the left were upfront talking about a potential ‘Election Budget’ by Fin Minister Piyush Goyal, which would hurt the Indian economy but just win the voters for the NDA in the upcoming elections 2019.
It was not a surprise to many people like me, who were thinking and expecting that the big ticket announcements will be with a connection to Farmers and Middle class of India. That’s exactly what the FM did this budget. NDA planned it in such a way that the economy is not at all hurt by the promises made in the budget, which is what is Right with the ‘Right’.
Firstly, the highlights of Budget 2019:
1. No tax on individuals having income up to Rs.5 lac. 2. Under PM Kissan Yojana, every farmer will receive direct bank transfer of 6,000 ₹ for owning farmland 2 hectares. 3. A Standard deduction for Salaried employees raised from Rs. 40,000 to Rs. 50,000. 4. Threshold limit for TDS on rent increased from Rs.180000 to Rs.240000. 5. Record 3 Lakh crore budget for the Indian Defence. 6. Raising the threshold limit for earnings through investments/savings for retired/homemakers to 40,000 from 10,000. 7. Pension scheme for the unorganized workforce of India which will give 3,000 per month after the person attains 60 years.
My View on the interim budget presented by Finance Minister:
Firstly, Finance Minister, Piyush Goyal has given his best. This was expected to be a really different budget and Piyush Goyal’s oratory skills and presentation of the budget was really very impressive. Not to forget Piyush Goyal is the Chartered Accountant and scored 3rd rank as a student.
The two big schemes or announcements for this budget will surely be the Income Tax rebate till 5 lakhs and the 6,000 rupees benefit to the farmers. But if asked, I would rate the tax rebate as the bigger announcement.
With the standard deductions getting increased and with all the other available deductions one doesn’t have to pay any tax even if his income goes up to 7 lakh. Apart from this, the scheme which raised the tax rebate from earnings for non-working women/retired personnel is a welcome move. People will now don’t have to bother much till their earnings are 40,000. Finally, the defence budget has been promised at 3 lakh crore rupees which are the all-time record for the defence ministry. These are some of the real big winners from the budget!
But how will the Govt earn revenue when he raised the tax rebate level to 5 lakh and how will they fund the other schemes like PM Kissan Yojana and 3 Lakh Finance Budget?
This is the Govt which has the studied economics well. If we think a little bit the logic is easy to understand. With a little effort, even an intermediate student whom I posed this question was able to answer.
This Govt believes in Consumption as the key factor to drive and grow the economy. Let’s say there is an individual who earns 5,00,000 rupees, till last year he would pay the tax of amount ranging between 5000 to 10,000. But now with the rebate coming in, he doesn’t have to pay any tax.
So what he would do is either save, consume or invest. If he invests in any kind of financial instrument he would pay either Long term capital gains tax or short term capital gains tax. If he wishes to save, then the Bank will make the tax payment to Govt for showing higher deposits. If he wishes to purchase a product or render any service he would be paying GST. This is how the Govt has well worked on the plan of raising the Tax rebate to 5,00,000. It may look so simple today, only the time will tell how will this work and how much it has really gone into the heads of Indians!
The February series had started on 1st Feb but little attention was paid on it as that was a big budget day and everyone was taken over by that big fundamental event. The budget came, the market liked it and we had a big rally of over 100 points for Nifty and it closed close to 10900 mark. Now the action is back on February series and if we look at the last four years February is negative in 3 out of the 4 years. 2015, 2016 and 2018 saw declines in February while only 2017 saw February month going up. Last year was very bad with an 800 point fall. There was always a post-budget sell-off seen and last year it was on the LTCG while this year it could be other factors.
If we look at the events this month, we have a lot of political events taking place and West Bengal already in a mini-crisis, many such events can be expected. Apart from that, the Q3 results will continue for another 10 days with many important companies like SBI coming up with numbers. We also have the first monetary policy of the new RBI Governor scheduled for 6th February, which will be closely watched by the market. Then we also have the IIP and CPI inflation data for December and January that comes will throw further light on how Q3 GDP is going to be. Then we have the Q3 GDP numbers coming on 28th of February that will be on the expiry day of February series.
How is the February series placed?
February series has started on Friday with just 41% long positions on Nifty futures. But the positivity of the budget had led to a lot of buying on Nifty futures and now the overall long positions for Feb series is at 45%. These 45% positions are open positions on Nifty futures which were not closed. On the options side also, the series started a bit heavy with a lot of rollovers and the put-call ratio was 1.65 which eventually decreased to 1.63 by the end of the trade on Friday. The 10700 put has the highest open interest followed by 10400 and then 10500. On the call side 11000has the highest open interest followed by 11200.
So, one view is Nifty will remain in a narrow range of 10700-11000 throughout this month and if 10700 is broken on downside then we can test the 10400-10500 range which is bearish and can happen if things go wrong politically. On the other hand 11000 is very strong resistance and a very positive political event if at all occurs can break this and in that case, Nifty might go to 11200. So, safely 10700-11000 is the range for this month with a 40% chance of Nifty doing down to 10400-10500 levels and 20% chance of Nifty breaking 11000 mark and going towards 11200 levels. Only political events can break this 10700 and 11000 mark on either sides.
What is the Nifty call for the day?
On Friday, you had a profitable day and now we are starting the new week with new cues. A mixed Asian market means we will also open flat between 10870-10900 mark and we are going to see the resistance again at 10920-10940 zone and on the downside, support will come at 10850 levels and another at 10800-10820 levels. We are at the top end of the range and this is just a 300 point range so trading is tough. Wait for a fall and if Nifty falls to 10850 mark and takes support there then go long at 10850 with a 10900 as the target coming today, tomorrow or day after. If Nifty breaks 10820 and goes down, don’t take any positions and just wait for Nifty to find the base. If Nifty doesn’t go to 10850 then also, don’t trade. So, today’s trade opportunity is very specific and it comes only when Nifty goes to 10850 mark and finds support there and doesn’t fall below 10820.
Finally, the expiry day to the longest series which had full 25 trading days is finally here. We have started the series almost at 10800 level and now we are 128 points down for this series. Will this first series of 2019 goes to bulls or bears needs to be seen. Last 2 January series was very positive with over 500 point gain, so in that way, this is going to be a bit of a disappointment. Globally things are looking bright as US jobs data showed some positivity and Fed also said that it would be “patient” in looking at rate hikes. That pushed markets up and Dow gained 400 plus points. The Asian markets are in green with Chinese manufacturing data coming slightly better than expected.
On the domestic front, the big relief came for the market yesterday with ICICI bank coming up with a good set of results in Q3 and that augers well for the entire banking sector. Added to that was the Sri Krishna committee report that said Chanda Kochhar was at fault and she broke the code of conduct of the bank. Immediately the ICICI board distanced itself from her and sacked her and took away all her post-retirement perks and bonuses. But with no adverse financial implications on the bank because of the fraud, it’s a huge sigh of relief for the bank. Today Apollo Tyres, Airtel, Dabur, Dena Bank, Emami, Hero, India bulls housing finance, Petronet LNG, Power grid, Vedanta and V guard are coming up with their Q3 results.
On the derivatives front, today is the expiry day and if we look at the moves yesterday there was a massive selling on Nifty futures as the market was going up and from 13 point premium, Nifty Jan futures moved into the discount. Yesterday there was a lot of action on Index options and we saw 8.98 lakh crore turn over there itself and the total F&O turnover was 11.19 lakh crore. So, as I said the turnover has crossed 10 lakh crore. Today we might see it crossing 16 lakh crore. The contours are now placed at 10600 put and 10580 is a strong support and on the upside 10800 call has the maximum open interest and so today’s broad expiry contours will be 10580-10800 which is a 200 point range and Nifty put-call ratio is at 1.20 and that means there can be some movement over 10700 for Nifty today to make the PCR adjust upwards.
What is the Nifty call for the day?
Yesterday, I asked you to take long positions if Nifty goes to 10620 mark and if you had taken then you would be sitting on a mild 20 point profit. Today there will be a gap up open for Nifty between 10700-10720 mark and when that is reached you will have an 80-100 point profit. This is your final bonanza for the series and exit around 10700-10720 mark and book profits. 10720-10750 will be the resistance zone so don’t take any risk. On the downside, 10650 will be the support and I would expect the expiry to happen anywhere between 10680-10750 mark with a mild 3 PM move. We have already seen the 3 PM move yesterday also so don’t expect anything great. Be safe and tomorrow onwards we have a lot of cues to deal with including budget so keep your money safely in your pocket.
The 5th week and the expiry week has begun and we are where we were at the beginning of the series. We have not moved anywhere during these 4 weeks and these last 4 days might not be much of a difference. US markets are on positive territory with Dow gaining for the 5th straight week and on Friday it closed up 180 plus points in green. The promise of an end to the shut down seems to have added a positive trigger to the US markets. Today Asian markets are in green, except Japan and most of them are trading with a 0.5% gain with Hong Kong up by 170 points and Japan is the only market which is down 60 points. Brent Crude has settled itself and its trading at 61.5 dollars.
On the domestic front, there are problems with ICICI. CBI has raided Chanda Kochhar and her husband along with the Videocon offices and that will have a negative impact on ICICI. The main problem is even the present management of ICICI is named in the scandal of giving undue loans to Videocon for them helping Chanda Kochhar. Apart from that Zee also has some problems as Subash chandra is trying to find a majority stake holder to offload his stake in Zee. Q3 results continue to pour in and so far its mixed bag. Following are the Q3 results expected today: Bank of India, Canara bank, Chennai petro, Godrej properties, Escorts, Radio city, RBL bank, Tata power, TTK, Wockhardt pharma.
On the derivatives front, the action has now firmly shifted to options from Futures. The Nifty put call ratio fell further to 1.37 from the 1.43 mark where it began on Friday. The turnover in the Index options market was 5.53 lakh crore and that takes the overall F&O turnover to 7.24 lakh crore. On Friday, every strike on put side has unwinding of open interest and we saw 4.1 lakh shares unwinding, followed by 10800 put which unwound 3.3 lakh contracts. Still 10800 put has the highest open interest followed by 10700 put. On the call side 10800 call added 8.2 lakh positions while 10900 call added 7.2 lakh positions. 11000 has the highest open interest followed by 10900 call.
What is the Nifty call for the day?
Today, I caution you from trading and I know Monday morning not trading is not a great thing to do. Nifty is at 10780 and its likely to open in that band only between 10780-10800 zone and 10820-10840 is the 20 and 200dma and crossing that is going to be very tough. The downside is also not opening up with 10720-10740 offering a great support for Nifty. In such a scenario I would ask you to wait and watch and if during the course of the day any possibility of an options strategy opens up, I would tweet the same. We need to see if 10820-10840 will be taken out or not easily. Till then no point in going long or short.