November outlook | Stocks and Commodities

October 30, 2015

Time: 9 pm

November outlook:

1. October was a fantastic month.
2. First 4 weeks, markets were bullish.
3. The last one week saw a very sharp correction.
4. The correction was purely domestic driven as global cues were not bad.
5. October had many good news, first Fed minutes showed that Fed was not in hurry to raise the rate, second pleasant surprise from RBI, RBI cut rates by 50 basis points against the general expectation of 25 basis points, third ECB announced that it was ready for another stimulus, fourth China cut interest rate by 25 basis points for the 6th time in the last 6 months.
6. So markets continued to move higher in the first 4 weeks.
7. Then came the 5th week, HDFC results started the correction, followed by Axis Bank results and then the results from ITC and L&T.
8. However shares of companies that declared good results were up like Reliance, Bajaj Auto, Dr Reddy etc.
9. In my 'October Outlook' I suggested selling Bank Nifty 17200 Put and Call. Bank Nifty started from 17200 and went above 18000 but in the last week came down to close around 17200.
10. Effectively, the Bank Nifty did not move in the last two months.
11. August expiry was around 17200, September expiry was around 17200 and now October expiry was also around 17200.
12. If any one has created the position, 17200 Call and Put, and held until maturity, the profit was Rs 1100 per share, that is a whopping Rs 27500 per lot. It is almost doubling the money in one month.
13. Another suggestion to sell 15500 Put and 19000 Call for a combined premium of Rs 150 also did very fell. Bank Nifty moved between 17200 and 18000 and hence the entire premium collected is the profit.
14. Similarly, I suggested selling Nifty 7900 Call and Put for a combined premium of Rs 367. Since Nifty expired at 8110 , the profit was about Rs 150 per share and Rs 3750 per lot.
15. Another suggestion to sell 7400 Put and 8400 Call also gave very good profits.
16. This time, November series has only 17 trading session of which one trading session is gone.
17. From Monday we have only 16 trading sessions (excluding Muhurat Trading).
18. Just like RBI policy last month, this month we have Bihar election.
19. I expect Nifty to trade between 7700 and 8400.
20. Bank Nifty is expected to trade between 16500 and 18000.
21. Bihar election results and corporate results from PSU Banks will be the key things that can bring volatility.
22. Next Friday's trade is very important as markets will react to the Bihar's exit poll results and corporate results from SBI, PNB and Bank of Baroda.
23. I have Put options in Nifty at 7600 and below and Call options at 8500 and above.
24. I have Put options in Bank Nifty at 16000 and below and Call options at 18500 and above.
25. It is better keep a good distance until the end of next week as many data will make market movements volatile. Data to watch: Monthly Auto sales data, Manufacturing and Services PMI from India, China, Europe and US, ADP Non Farm Payroll data and unemployment report from US, exit poll results from Bihar.

DISCLAIMER

The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Readers are advised to consult their Financial consultants before taking any position. The analysis is partially Technical and partially Fundamental. The views expressed are the Author's own views.