Markets may have hee hawed a little on Wednesday but with the US removing export ban on Crude the move down in Oil is something Asia has not ignored in the morning and even as bears drop out of 7300 and 7500 positions, the lukewarm addition to 7600 puts OI will likely be followed up by a much better clamp down on the Nifty and Sensex at higher levels, markets looking to rally and given space by an unwarranted check down in Bank stocks like YES Bank yesterday. The indices look set to try their best in the July series and expiry will try for another 100 points from 7550 levels by the afternoon.
The bullish news from the budget desk, is especially notable for the markets because such welcome surprises have historically been wrapped in mystery and shadow power play till the actual presentation. The pre announcement of Excise measures and increase in Divestment limits will thus have a more than salutory effect on inflows to the market
The refusal of the government to tackle the gas hike may be excused and Oilcos may have held on but a downtick from low realisations is inevitable for ONGC , not for GAIL which remains a great buy with the banks like YES Bank even as HDFC /HDFC Bank look at pending applications to increase their FII limit to 67.5%
The trepidations of the Telecom markets are also seemingly facile as Bharti may not be weak in an expanding broadband market, yet the desperation of investors on the long side satill shows through sometimes such as the Six pick from CLSA/Chris Woods
Short Calls should stay away from 7550 7600 and 7650 series through the day. YES Bank will outperform by the afternoon with ICICI Bank . 7550 is safe even if the SBI/Pvt Sector trade off gets in the way. Sun Pharm will continue down without hindering the broader market and uptick in Domestic Pharma plays now adding on US business.
Bajaj Auto likely takes over from Heromoto in the new series again. and the Power NBFCs are also a big buy even at new levels in July. Currency and bond markets will be higher despite a seeming market predilection with equities.