1 week Ago
A sparkling stock market opening expected on Friday is no reason to disregard caution, and investors loaded up on equities should seize the opportunity to book some profits, market veterans said. Stocks surged worldwide after US president Donald Trump paused the rollout of stiff levies on its trading partners excluding China for three months. However, after the White House said on Thursday that China will face levies of 145%, the US markets plunged again.
The Indian markets remained shut on Thursday for Mahavir Jayanti. The Gift Nifty, in response to the overnight and Thursday morning cues, traded at 22,965 at 9:30 PM, pointing to a 600-700plus points or 2.7-3% jump in Nifty when the market opens on Friday.
The Nifty had closed at 22399.15 on Wednesday. However, the Indian market may see profit-booking at higher levels, if the global markets sour during the day.
Gift Nifty is closed for only three holidays this year -- Independence Day (15 August), Mahatma Gandhi Jayanti (2 October) and Laxmi Pujan (21 October). Investors from across the globe trade the Gift Nifty after the NSE closes at 3:30 pm on weekdays. It trades over two sessions, from 6:30 in the morning to 3:40 afternoon, and from 4:35 pm to 2:45 am, from Monday to Friday.
The Nifty closed down three-fifths of a percentage point at 22,399.15 on Wednesday, the day the reciprocal tariffs on over 70 countries took effect. However, in line with cues from Gift Nifty, it's likely to surge on Friday.
What experts say Experts suggested caution amid rising policy uncertainty. "An investor should stick to his or her asset allocation objective in a market governed by so much of volatility," said Nilesh Shah, managing director, Kotak Mahindra AMC, adding that Indian markets might not rally as much global peers like S&P and Nikkei as it hadn't fallen as much in the recent sessions. Ambareesh Baliga, an independent analyst, said that investors "overweight " equities should book profits on large gap-ups "as one likely to be seen on Friday.
" "Global stock markets are subject to the vagaries of news flows which keep changing overnight; so, it's best to remain cautious," said Baliga. Shah cautioned that investors should refrain from taking "excessive leverage" or "over-trading." The rally is expected to be driven by short-covering and selective cash buying, given the lingering uncertainties.
On Wednesday, bulls trimmed their cumulative long positions on the index futures contract expiring on 24 April to 13.16 million contracts from 13.43 million contracts on Tuesday as the Nifty fell 0.
6%. FPIs have largely hedged themselves by shorting index futures by a cumulative net 115,835 contracts as of Wednesday. As most of these positions are hedges, their loss will be offset by the gain in Nifty and Bank Nifty shares when markets open on Friday.
However, the pain will be felt by retail/ HNI investors and proprietary traders who had shorted index call options by a net 196,920 contracts and 128,012 contracts respectively. Call option prices will spike on Friday, causing those without hedges huge losses. The put-call ratio of the active Nifty contract indicates that traders had sold just 74 puts for every 100 calls sold.
For buyers of cash market stocks, the caveat is to wait and see. "There is so too much of policy-level uncertainty, to-ing and fro-ing. Best to wait for more clarity.
India will see a rally as we are oversold," said veteran investor Shankar Sharma. Markets didn't react to RBI policy rate cut for a second straight time by 25 bps to 6% and change of stance to accommodative from neutral along expected lines. But this will be the added factor that partly boosts the rally on Friday, said S.
K. Joshi, consultant, Khambatta Securities..
