"Our markets opened firm, due to follow up buying and short covering a head of SEBI board meeting, on the derivatives settlement day, and finally closed in positive territory, with less volatility. SEBI has announced its new regulations / norms on treatment of "P Notes" with immediate effect more or less in line with draft guidelines issued earlier on 16.10.2007. Now it is law and P notes issued by sub accounts which are ODI have to be wound up in the coming 18 months, and also these type of instruments cannot be issued from immediate effect. An estimated investment under this category of US$ 34 billion, has to be swapped with other eligible players or wound up gradually, or get the entry through front door, that is by registering as FII with SEBI, for which most of the participants have already submitted a letter of intent, as directed by SEBI already. They need to file the application within a week and if their applications are cleared then they can continue to enjoy the facility.
US markets were volatile, due to higher oil prices, and mixed earning numbers, and on slipping new home sales data, finally closing marginally in negative territory. Inflation data shall be released at 12 noon on our economy. Markets will concentrate on the FOMC meeting scheduled on 30th & RBI credit policy on 31st now, and position accordingly. More or less major results are out and are in line with analyst's expectations. TISCO will come out with results today, the liquidity from FIIs to our markets, in view of the polilcy changes, political situation will drive the markets from now on. We feel that the volatility shall continue till 9th November, Diwali, and from then markets may stabilise a bit. Since we are already at 18800 levels on sensex, it shall be prudent to sell a portion of portfolio on rallies, where as substantial gains are made, and stay in cash to pick up the same stocks or value picks at a later date, as markets shall provide such ample opportunities, in future. Nifty futures closed at 34 points discount to the spot indicate bearish view on the markets for today.
Strategy for the Day: One can buy a straddle of 5550 strike price on nifty in November series and leave it till the end of series.
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