Outlook for Tuesday

"Our markets have opened with negative gap, following global cues, however, due to roll over of positions to next month series, traded volatile in a range, and filled the gaps intraday. While Sensex posted marginal gain after posting 4 days losses, nifty closed in negative territory at the end of the session. Nifty futures closed at a discount of 9 points, as some shorts are closed in the morning session and rolled over to November series, as discount of november series stands at 28 points.

 

SEBI chairaman had a conference call with FIIs, and clarified the stand on draft regulations, asserting that the stand is clear that in medium to long term "KYC is the key issue", though ban is not the intention. Few concessions and relaxations are given like, proprietory clients who are operating as sub accounts also can register as FIIs in the direct channel. As of now 3000 + sub accounts have to convey to SEBI whether they are intending to convert to FII withing 24 hours, and submit regular application with in a  week.25.10.2007 Board meeting will put the classification of overseas investors, guidelines for registration, norms for trading and other complainces in place releasing the new guidelines, which give maximum time of 18 months, for phasing out the present ODI which are issued by subaccounts. More or less stand of SEBI is clear now, and it is for the FIIs, Overseas players to decide how they have to deal with Indian investments.

 

In our view, genuine investors and investments which came under this ODI shall not have any problem, and comply the SEBI new guidelines and continue to invest in our markets which are giving best returns. SEBI chairman assuring overseas investors, to hasten up registration procedure, and encourage more investors to come under FII route, shall encourage more flows and invetments in the years to come.

 

UPA - Left coordination committee, as usual met and decided to put the operationalisation of the US-Indo Nuke deal onhold, and meet again on 16th November, 2007 to come out with clear view on issues of concern on the deal. None of the constituents are prepared for pulling the government and thrusting the mid term poll immediately, so this shadow boxing shall continue for some more time. Results of Indian corporates are in line with expectations, and some have come with stellar performances, thus, any weakness intraday or in the coming days, is a good opportunity for entering markets.

 

Inspite of huge volatility, Nifty has not breached septemeber closing levels, though posted lower highs and lower lows yesterday. Sensex has breached the september levels intraday, however, closed above it yesterday. Our markets shall trade in a broad range of 5000 to 5700 on nifty and 17000 to 19000 on sensex, which can be treated a consolidation phase, till 31.10.2007, by which time all the events will pass, and shall rally till 9th november, 2007 as pre diwali enthusiasm will push stocks and indices usually. Volatility wil continue for rest of the year, as we are at very high levels, and indian markets are having higher beta, which give huge gyrations.

 

Strategy for the Day: Buy 5000 calls on weakness and 5500 puts on rallies for quick returns in intra day trading.