October outlook, September 26, 2013 | Stocks and Commodities

P R Sundar, Aditya Trading Solutions

September 26, 2013
Time: 10 pm

October outlook:

Positive Things:

1. Despite market sentiment being very bad, FIIs are buying in the cash market. 
2. DIIs are selling due to the redemption pressure. People go for redemption because they are scared of last month fall to 5100 from 6000. So when the markets bounced, they liquidate and wait for a fall to reenter.
3. But this redemption pressure will subside in the days to come.
4. Volatility index has come down from the peak of 35 to below 25.
5. Syria problem has been solved and hence Crude oil is trading below $110 consistanly.
6. Global cues continue to be good as there is no major correction in any of the developed economies.
7. Economic news from China, Europe and Japan shows that those economies are stabilizing.
8. Our currency has also stabilized.
9. Q2 results may not be good but expectation is also very low. So possibility of negative surprise is very low whereas possibility of positive surprise is high especially from IT and Pharma stocks.

 Negative Things:

1. Inflation is still not under control.
2. IIP data also will not be good.
3. US Dept. ceiling issue will also be a big drag.
4. FOMC meeting will also add to the uncertainty towards the end of October.
5. Election in 5 states will force the Govt. to delay difficult decisions.

Conclusion:

1. Nifty will trade between 5500 and 6300 in October series. Since this is a 5 week month, forecasting is little difficult. But Nifty will trade in this range only.
2. As there are big event risks in the first half of the month, market movement will be decided by the global cues, currency movement and FII flows.
3. Among Put options, 5700 has highest open interest and among the Call options, 6100 has highest open interest. So I have taken 200 points more for additional safety to arrive at 5500 and 6300 level.

 Recommendation:

1. Sell Nifty 5400 Put option and 6400 Call option simultaneously which closed at Rs 30 and Rs 20 respectively.
2. Sell Bank Nifty 8000 Put option and 12000 Call option which closed at Rs 38 and Rs 28 respectively.
3. Sell Yes bank 420 Call option if it trades above Rs 7.
4. Sell SBI 2100 Call option if it trades above Rs 6.
5. Sell Mcdowell 2000 Put option and 3000 Call option.