Nifty remained range-bound and was struggled to break the 5366 mark recorded on Thursday. A break above 5366 can lift the Nifty towards 5450 levels. But the chances are remote because the ongoing tussle between bulls and bears may end in favour of bears.
The daily declining open interest of Nifty put-call ratio (PCR) and volume PCR are in favour of bears. The increased implied volatility of Nifty put options at 5200 and 5100 clearly indicates weak market breadth. This can be re-confirmed if Nifty closes at or below 5214.
The NSE VIX is gaining upward momentum and represents uncertainty, which may rule for the time being in the market. The Nifty out-of-the-money call options have lower implied volatility than at-the-money call options, hinting strong call writing by bears.
On the put option side, higher implied volatility at out-of-the-money put option infers buying of put options. However, a decline in open interest of the in-the-money put options indicates profit-booking by put buyers on an intra-day basis because of lack of conviction about the future course of the market. The Nifty Bank Index is showing signs of fatigue and it can fall towards 9301-9100 levels.
With the given Nifty outlook, put-ratio-spread strategy on Nifty is more suitable. Buy one lot of July 5300 put at Rs 131 and sell two lots of 5100 put options at around Rs 65. The maximum profit will be around Rs 9,950 at 5100 level. The maximum loss of Rs 50 if Nifty moves above 5300 on July expiry, and the down-side break-even point will be at 4901.
This strategy is a classical example of delta-neutral strategy. The risk will be minimal in nature if we will recalculate the net deltas on a weekly basis to eliminate the trading risk completely.
(Alex Mathews, Head-Research, Geojit BNP Paribas Fin Svcs)
Heard on the street: Punters game for big play on IFCI counter
Punters game for big play on IFCI counter
Who says defensive stocks belong only to the fast moving consumer goods (FMCG) and pharmaceutical sectors? If a handful of influential market participants get together, they can confer that tag to any stock of their choice, or so it appears.
IFCI is turning out to be one such stock which operators turn to for a quick buck in uncertain market conditions. The stock has been a happy punting ground for day-traders, operators and short-term institutional players right for some years now.
It is usually a safe haven for bull traders who take up positions and spread rumours about favourable government policies. By the time smaller players realise they have been taken for ride, the big fish have already cashed out. This has been the pattern at the counter for at least three or four times a year since 2007.
The latest buzz is that IFCI will be granted a banking licence in a few days. Volumes in the stock have surged in the past couple of sessions, with nearly 4 crore shares being traded on the National Stock Exchange (NSE) alone.
The stock held firm in a falling market to close at Rs 57.80, up 1.5% over the previous close. Either the smaller punters are being set up for the kill, or the big boys are accumulating shares on privileged information.
HPCL may find pride of place in Nifty, again
What goes round comes around, and this seems especially true of some of the stocks that form the benchmark indices. Speculation is that the renewed interest in oil marketing shares could eventually lead to a higher weightage for the segment in the Nifty.
Hindustan Petroleum (HPCL), which was excluded from the index in 2007, is being talked of as one of the possible entrants. If the stock does manage to re-enter the Nifty, it will become the second company since Hero Honda to achieve that distinction.
However, some market players are sceptical if HPCL will be able to regain its place, since the oil sector is already well represented in the index by Reliance Industries, ONGC, Cairn and Bharat Petroleum.
There is also speculation of some stocks being excluded from the Nifty, with Suzlon Energy topping the list of probables. The stock on Thursday has the least weightage in the Nifty, with market capitalisation down 85% from its peak of Rs 65,459 crore seen in January 2008.
(Contributed by Santosh Nair)
********************************************Who says defensive stocks belong only to the fast moving consumer goods (FMCG) and pharmaceutical sectors? If a handful of influential market participants get together, they can confer that tag to any stock of their choice, or so it appears.
IFCI is turning out to be one such stock which operators turn to for a quick buck in uncertain market conditions. The stock has been a happy punting ground for day-traders, operators and short-term institutional players right for some years now.
It is usually a safe haven for bull traders who take up positions and spread rumours about favourable government policies. By the time smaller players realise they have been taken for ride, the big fish have already cashed out. This has been the pattern at the counter for at least three or four times a year since 2007.
The latest buzz is that IFCI will be granted a banking licence in a few days. Volumes in the stock have surged in the past couple of sessions, with nearly 4 crore shares being traded on the National Stock Exchange (NSE) alone.
The stock held firm in a falling market to close at Rs 57.80, up 1.5% over the previous close. Either the smaller punters are being set up for the kill, or the big boys are accumulating shares on privileged information.
HPCL may find pride of place in Nifty, again
What goes round comes around, and this seems especially true of some of the stocks that form the benchmark indices. Speculation is that the renewed interest in oil marketing shares could eventually lead to a higher weightage for the segment in the Nifty.
Hindustan Petroleum (HPCL), which was excluded from the index in 2007, is being talked of as one of the possible entrants. If the stock does manage to re-enter the Nifty, it will become the second company since Hero Honda to achieve that distinction.
However, some market players are sceptical if HPCL will be able to regain its place, since the oil sector is already well represented in the index by Reliance Industries, ONGC, Cairn and Bharat Petroleum.
There is also speculation of some stocks being excluded from the Nifty, with Suzlon Energy topping the list of probables. The stock on Thursday has the least weightage in the Nifty, with market capitalisation down 85% from its peak of Rs 65,459 crore seen in January 2008.
(Contributed by Santosh Nair)
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