It’s a fun fact that, all through the past 3 years, In the month of September, Nifty has been at the same level of 11000. It makes you wonder at times of what kind of wealth has really been created over the last 3 years in our markets. In fact it took Nifty 2 months to climb from 10800 to 11800 on the way up and only took it 4 days to come back to 10800 on the way down last week. That’s how markets work !
The fall that happened on the last day when Nifty touched the 10800 level was on its own. There was no support from world markets namely Europe and the US over here. Secondly the very next day saw Nifty bouncing back 250points, signalling that it was just taking out the weaker hands on that day. The day Nifty bounced back, the put premiums started to erode at a very fast pace. If there was any downside left immediately the put premiums would have eroded at a slower pace signalling that FII’s are still buying put options or adding to them.
Coming to getting stock specific, In our last blog, we mentioned some great opportunities where in we sold Bharti Airtel calls to begin with. The past 3 weeks has seen a nice fall in this stock leading us to have handsome gains in our sold calls. We also mentioned that Tata motors was going to see some wild moves which also played out beautifully as Tata motors moved from 138 to 155 and then to 124 again. We see Tata motors continuing to be volatile even now and thus have further embarked upon new long strangle opportunities. We also see Dr Reddy being a strong candidate for a wide short strangle owing to its high premiums.
To add another name to our bucket, we are also going to start our first trance accumulation of Aurobindo pharma at 770-780 odd levels as well. The Banknifty apparently is pricing in some negative news that might come out of the supreme court hearing on the loan moratorium case. I, however expect Banknifty to cross 25000 before this calendar year ends, which is still 20% of upside from the current levels.
