Nifty trade sentiment at ‘Buy on dips’ amidst FIIs short covering and sector opportunitiesBy Manojh Vayalar The December series Nifty futures started with a premium of around 100 points for the current month. The Nifty has rolled around 73% and Bank Nifty around 80%. For the Index futures, FIIs have reduced the short positions to 40% as of yesterday from 56% at the start of the December series. The index is now in a ‘Buy on Dips’ mode till 21000 is not breached on closing basis, for the December series.21000-21200 might be the immediate support and only a decisive close below it might bring in further downside. For the Bank Nifty 28th December, 46000 strike Put option has huge open interest implying support at around 46000. For the Nifty, the VWAP (Volume weighted average price) of December Futures is around 21000 implying that to be the support. Above this, Nifty is to be positively biased for the short term towards 21600. With FIIs reducing their short positions majorly as short covering, we expect Nifty to continue with its positive bias.The ratio between Bank Nifty and Nifty is currently at 2.24, this ratio has a support at 2.20 and resistance near 2.27. We expect Bank Nifty to outperform the Nifty in the short term. Sector-wise, Banking, IT and Pharma look good in Nifty.Nifty Call Spread:-Buy Nifty 28 DEC 21300 CE @ 240.Sell Nifty 28 DEC 21600 CE @ 90.Spread @150, SL @ 70, Target 250. (Manojh Vayalar, VP-Derivatives, Religare Broking Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)
If the current trend continues for a longer period of time, not only oil mills but oilseeds growers will also not be able to get good rates of their produce, says Samir Shah, president of Gujarat State Edible Oils and Oil Seeds Association (GEOA). Shah who is also past president of SOMA says that due to various international factors rates of edible oils had gone up considerably, especially imported oils earlier this year.
“With a view to curb rising prices of edible oil, the Government of India reduced import duty on edible oils. Considering the fact that India is producing hardly 30 percent of its edible oil requirement, the decision was right at that point of time. Now when international prices of edible oils have gone down by 15 percent to 25 percent and high production period has started in edible oil exporting countries, the government should gradually increase import duty to protect local oil mills and oilseeds growers,” said Shah. GEOA has also made representation before Union Minister for Commerce & Consumer Affairs, Piyush Goyal to increase import duty.
In June import duty on edible oils was ranging from 35 to 55 percent, since then the government gradually reduced import duty and at present it is ranging from zero percent to 15 percent on different edible oils, he said.
Just a month back prices of edible oils were through the roof and the government took appropriate measures by reducing import duty in order to protect consumers, says Atul Chaturvedi, president of Solvent Extractors Association of India (SEA). “Prices of edible oils are coming down globally. Kharif sowing has already started across the country. In the interest of local farmers, it is high time to enhance import duty in a phased manner to encourage local edible oil value chain,” opined Chaturvedi.
On Thursday imported Palm oil prices were at around Rs 2100 per 15 kg as against local Rs 2700 and Rs 2550 of groundnut and cottonseed oils. Prices of other local oils including ricebran, coconut, soyabean and mustard remained as high as Rs 2350, Rs 2520, Rs 2500 and Rs 2580 respectively.
India imports around 13-13.5 million tonnes of edible oils, of which around 8-8.5 million tonnes (around 63 per cent) are palm oil. Though the price of other imported Sunflower oil remained at around Rs 2700 per 15 kg, but import quantity of the oil is much lower than that of palm oil.