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Sell Nifty 5300 CE, 5100 PE of July series: Nirmal Bang
21 Jul 2012, 02:00 PM
In the previous fortnight, few companies announced their earnings for the first quarter. While most of them were in line with market expectations, IT bellwether Infosys announced a negative guideline, which resulted in more than 8% loss in its stock on the day the earnings result was announced. However, Tata Consultancy Services offered hope to the market with a better-than-expected Q1 FY13 result.

Also, the government declared a better-than-expected May Index of Industrial Production (IIP) data of 2.4%, which was driven by 2.5% growth in manufacturing in May due to the base effect. Another important aspect in the May IIP was a mere 0.1% month-on-month growth in consumer non-durables, which is a cause of concern because growth in consumer non-durables reflects the basic consumption demand in the economy. Another negative aspect deduced from IIP numbers is that 10 out of the 22 industry groups showed a year-on-year decline in May.

The monetary policy review to be announced by the Reserve Bank of India at the end of 31st July will be an important event for the markets. The June inflation data may influence the monetary policy.

Talking about markets, the Nifty futures already gained 1.7% in the first half of the July expiry on the back of around 4% increase in the June expiry. The markets had, however, lost around 5% in the May expiry due to weak European cues.

The Put Call Ratio-Open Interest (PCR-OI) for Nifty Options has been hovering around the range of 1.24-1.12 since the start of the July expiry, suggesting a range-bound scenario for the market, dominated by Options sellers. One can expect the PCR-OI to stabilize at current levels and remain range-bound between 0.95-1.3 in the days to come.

On the Options side, the highest build up for Calls as well as Puts stands at 5,000-5,400 (current market price at 5,240 as on 13th July) for the July series, indicating that the markets will expire between these levels for the July expiry scheduled on 26th
 
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