Dalal Street Week Ahead | Stocks and Commodities

October 11, 2015
Time: 10.30 am

Dalal Street Week Ahead:

1. Lat week, though markets were up by over three percent, the entire action was only on Monday.
2. From Tuesday onwards, markets were choppy and selling came every time Nifty crossed 8200.
3. As I have stated in my October Outlook, 8200 to 8300 zone is a huge resistance zone. (As per Efficient Market Hypothesis, Nifty should trade between 7500 and 8300)
4. After I have written October Outlook, there were many positive things have happened, RBI cut 50 basis points which was higher than expected, commodities are surging globally due to some global developments, Fed minutes showed they are not in hurry to hike rates, most emerging markets posted a best weekly gain in the last years, etc.
5. In the last two weeks Nifty has gone up nearly 300 points which is around 3.5% but Bank Nifty has under performed despite 50 basis point cut in interest rates.
6. Bank Nifty was also up by just 300 points which is just 2%. Bank Nifty did not move higher even after a good results from IndusInd Bank.
7. Tomorrow Bank of Baroda will come under pressure due to 6000 crore black money transfer scam and that may bring other PSU Banks also down. So overall sentiment towards Bank Nifty will continue to be weak.
8. But in the first hour of trading, Infosys will dominate the market.
9. I have sold 1000 Put and 1300 Call for a combined premium of Rs 15. I expect to make at least Rs 5000 profit on 4 lots I sold.
10. Next week, Infosys, TCS, HUL, LIC Housing Finance and Reliance are the key companies that will declare results.
11. Also IIP data and Inflation data are the key data to watch.
12. Inflation is expected to be slightly higher and that is not good for Banking stocks.
13. All key banking companies in US will also declare results in the coming week.
14. So the trend of beaten down stocks out performing, Banking stocks under performing may continue next week.
15. IT stocks will take cue from Infosys and TCS results, anyway Infosys is trading closer to its 52 week high and hence upside will be very limited.
16. I am not expecting more than 5% swing on either side in Infosys in tomorrow's trade.
17. Sell Bank Nifty 18500 Call option at Rs 90 and 16000 Put option at Rs 45. I expect the Bank Nifty to trade between 16000 and 18500 until the end of this month.
18. Those who are still bullish on Bank Nifty may choose to sell Bank Nifty 16000 Put and 19000 Call option, still can get a combined premium of Rs 75.
19. There are only 13 more trading sessions in this series. Time value will work in our favour.
20. Nifty is likely to face resistance at around 8280. I am not expecting Nifty to cross 8300 next week. But again it all depends on Infosys and other company results.
21. I expect the Nifty to consolidate between 8100 and 8300, if things go as per our expectation.
22. Our expectation: No fire works in Infosys results, slightly higher inflation data, no big surprise in IIP data, no big positive or negative surprise from global front.
23. If Nifty trades above 8250, then Sell 8500 or 8600 Call option. Then after that if Nifty falls below 8200, then sell Nifty 7800 or 7700 Put option.
24. I expect Nifty to trade between 7700 and 8300 or in best case 8400 until the end this month.
25. Next week will be crucial to decide the medium term trend of the market.