Inflation data, interest rate cut, extent to which ECB and BoE cut rates will decide Indian Market movement – HBJ Cap, expects positive move.

In a roller-coaster trade, BSE/NSE closed flat on Wednesday after two days of selling, though interest rate sensitive realty and banking shares made handsome gains. Gloomy outlook on economy continued to dominate and fears of contracting demand for services of outsourcing companies also loomed large. recovery should not be given any importance as it is mainly on account of intraday short-covering by day traders.

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The pullback rally is likely to happen in December 2nd half and that pullback rally will take it somewhere like to 3,000 or a little higher. But before that we might see Nifty level close to 2550. So, under such situation one can have Nifty 3000/2900 Call & 2400/2500 PUT both to hedge & also make better profits.
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The markets don’t know which side to break out of amid longer-term downtrend and shorter-term uptrend mood. On the fundamental side, some positive measures are expected like rate cuts, stimulus package and more liquidity measures. Whichever side the market breaks out, markets could go around 1,000 to 1,500 points on either side.

Prices of Government Securities (G-Sec) shot up by around Rs 2 on Wednesday on expectations that the Reserve Bank of India would soon announce “steep cuts” in its signal rates – repo and reverse repo.

HBJ Capital's Views for Thu:-
Today’s rally in the government securities market discounted a deep cut of anywhere between 100 and 150 basis points in the signal rates by the RBI. The market movement tomorrow will depend on a host of factors - inflation data, interest rate cut that RBI may effect, announcement of additional borrowing by the government, and the extent to which ECB and BoE cut rates.

We are expecting Nifty to move up 2% because the underline news is expected to be +ve. Indian markets will least bother about global clue which is coming mixed.

Strategies:-

1. Those who are holding PUT Option remain invested and buy more PUT option of Nifty 2500 & below if Nifty moves up >2-3%. Do all your buying 30min before the market close.
2. Those who are holding CALL Option can enjoy the ride but you MUST book profit in case if Nifty moves higher on Thu, because even if there is a rally, it will be for one day or two only.
3. Fresh buying of CALL not suggested, one can expose PUT if Nifty rises higher > 2-3%.

- Sandeep Jain, Associate, HBJ Capital