India Morning Report: A new series beginning at 5900 is obviously a downride

Rollovers apparently came thick and fast in the last half hour on Thursday, premiums ruling at their lowest all time at 60-65 basis points even as nearly 75% positions were rolled over at these low prices. Unnecessarily perhaps as the optimism was followed by a weak Friday opening and a correction here laggards are already ahead of the leaders on the A/D ratio and the banks like Axis Bank at 1500 or some of the PSU stars including even BOB could be ripe for a big fall. However, ICICI Bank reports in the afternoon and the healthy growth there is likely to shore up sentiment by Monday afternoon, leaving the cushion of IT disarray a fundamental point in favour of the bullish ride purely in flow terms as JET, ITC and YES show signs of a bigger new level for the scrips landing plum market caps and for two out of three probable index spots around the corner as indusind builds on its new liquid levels in individual scrips that encourage two way speculation

ICICI Bank would follow HDFC Bank with a downtick despite a strong earnings performance with profits likely up by more than 30% but surely that is just temporary till the scrip catches fire around 1080 levels again and may not even wait for Axis to complete down moves till 1350 from here. 25% bank branches in Tier 5 and 6 areas for new banks as a requirement would meanwhile also encourage the regulator to demand the same for new branches from existing players and one feels rural centers with skeletal staff are ore than likely to be the answer apart from correspondent and nbfc arrangements. Indian CASAs remain very high and credit offtake signs could be required before rates and bank profits move from here at least in market expectations thus potentially nipping this rally in the bud much to the enjoyment of TV18 staff and Shankar Sharma and maybe more DIIs than one may think possible, but it is still likely that as we forecast markets go north from a swift correction tonight by Monday itself

F&O strategies at this time should start now with a straddle/strangle sold for 5880-5920 levels and then sell puts or even calls as needs get ascertained towards the end of next week. April data alone is probably not enough to provide grounds for any effective research hypothesis on the markets but if institutional interest can be extended to domestic players with a small cut it would help markets and support dealmaking and fundraising plans which would havetentatively taken shape on ideas from the last December quarter . As of no only the 75% promoter divestments are hitting the ticker.

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