Market update 2nd August

Monetary policy day today. Everyone has factored in 25 bps cut. That means there is a good probability that RBI will do something different. Either no cut or a 50bps or a remote chance of 75 bps cut and wishful thinkers like me can dream of a 100 bps cut. If any of these happens there will be wild swings in the market. NIFTY will not move much if there is a 25 bps cut but any other scenario can set it on fire. No rate cut of 25 bps cut with hawkish commentary will taken NIFTY down by more than 50 points. Any 50 bps or above cut might see NIFTY crossing 10,200 today itself. There is a problem of liquidity and the system has to absorb that. That simply means people converting their cash into bonds and that happens only when rates go up but rate cut would be further liquidity coming into the system. The only other alternative left is converting that liquidity into products and services which again depends on many macro factors. so, RBI will be in a fix to give a big cut now!

NIFTY will open flat above 10,100 levels and might remain flat in a range till the monetary policy is announced at 2.30PM. 10,350 and 10,400 call is seeing some writing and that indicates that people are betting on a rally due to rate cut and that might push the premiums up and they are seeing an opportunity to eat those premiums early in the series. Bank NIFTY is also seeing a lot of action around 25800 and 25900 levels. NIFTY put call ratio has jumped to 1.11 from 1.06 the day before indicating lot of people buying puts at the 10,100 and above levels. So expect a volatile day around the monetary policy time and lets see where it closes.

Q1 results scheduled for today

1. Bata India
2. Edelweiss
3. Emami
4. Godrej Properties
5. Greenply
6. Lupin
7. Punjab National Bank
8. Reliance infra
9. TBZ
10. Uco bank
11. Voltas
12. Wockhardt
Am expecting Voltas and PNB to come good and Lupin and Uco bank to disappoint.