Dear Trader…
Post expiry of January contract, the weakness continued in the market and Nifty made failed attempt of upside bounce of the session, among stock futures, positions were not unwound much, and longs constitute more than 56% of the segment.
FIIs have made no secret of their intentions; FIIs boosted their index shorts by a whopping 32%, bringing lower the proportion of longs in the index future segment to 59%, the lowest this month. Call shorts were boosted by 49% on Friday, but the FII holdings here is the lowest in the index option segment.
The Sensex and Nifty had a fabulous run in the previous three consecutive series. However, the January series concluded with some roller coaster move by shedding more than a percent. It was certainly a historical one as we saw Nifty hitting fresh record highs of 14753 levels.
Unfortunately markets failed to keep up the same momentum as the index corrected from the life time highs and eventually concluded the inaugural series of the calendar year 2021 tad below the psychological mark of 13808.
During the series, we saw decent profit booking along with few shorts in Nifty futures; whereas, in case of banking index meaningful shorts were added throughout the series. Rollovers in Nifty stood at 77%, which is in line with the three month averages.
In the new calendar year, several emerging markets, including India, touched record highs in hopes of a relief package in the U.S., but U.S. Delays in announcing a 1. 1.9 trillion Relief package by President Biden have dampened investor sentiment around the world. In addition, the re-lockdown in many places due to the spread of Corona virus had the opposite effect on the stock market.
On the global front, the recent rise in corona cases, hospitalizations and deaths in the United States has again put the global economy in trouble and has had a serious impact on economic activity and job creation.
The direction of the economy is still dependent on the status of the Corana virus. In addition to the growing case of Corona, the US Federal Reserve has kept the benchmark interest rate at a record low of zero in view of the slowdown in the economy.
At the local level, this time the budget will prove to be a challenge for the government amidst the adversity of the epidemic; the government is expected to aggressively pursue a disinvestment program in the next financial year, given the shortfall in government coffers caused by Corona. In the current financial year, the government had proposed to raise Rs 2.10 lakh crore through disinvestment in government undertakings, but so far only Rs 15,000 crore has been raised. The government is considering selling 14 to 15% stake in LIC.
The Modi government’s commendable efforts to get the Indian economy back on track have led to huge growth in foreign funds – foreign portfolio investors who have seen huge growth opportunities in India in the coming days, but the economic front still faces many challenges In the event of a downturn, the performance of Corporate India is also likely to weaken.
The short term trend of Nifty continues to be volatile. But, having placed at the crucial support of 13676 levels and a formation of high wave type pattern could hint at the possibility of upside bounce from the lower levels, post confirmation. A decisive move below 13676 is likely to negate this positive development and could lead towards further low of 13575 – 13474. On the rise, the upper area of 13888 – 14004 could act as stiff resistance.
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