Extremely important day of trade coming up. As I write this, the SGX Nifty is down about 35 points. The most important cue as we start trade in first half is the big 5% decline in crude oil but the most important cue of second half will be the impending exit polls which will be announced post 5:30 pm. The market will give great opportunities today. This is how I think today can be played.
In first half, focus all your energy on users of crude oil – Oil marketing companies, Paint companies and perhaps most importantly aviation companies which could well go through a goldilocks scenario – tax advantage, lower oil prices and under-owndership. And with state elections out of the way, OMCs should swiftly move on petrol and diesel prices and paint cos too have corrected from highs. So this appears to be the low hanging fruit.
Crucially, in second half – trading psychology will work. Will shorts want to keep their positions open ahead of a mini binary event? Anecdotally, exit polls favour BJP and the market will know that. So I won’t be surprised to see a late surge in trade today, which could continue with a gap up tomorrow inviting some weak hands and finally a Sell on news in tomorrow’s second half.
These are my thoughts. You should act on what you think is right!!
Disclaimer: The author of this article does not invest/trade in stock markets including derivatives. His only exposure to stock markets is via the stock options given to him by his employers as part of his compensation