- Wealth PMS
It’s 2 PM and the news is that we have a new government. The BJP, with Narendra Modi as it’s PM candidate, will be the ruling party for five years. They have won with the largest margin known – the NDA is leading 339 seats.
This calls for a round of applause because we haven’t had a convincing majority for one party for a very long time (the BJP alone has enough seats for a majority, apart from the coalition partners).
The changes now are there is no one to “appease”. It was the charisma and planning of one section of the BJP – the Modi section, compared to the old guard of the Advani/Swaraj types – and the complete lack of any connect with the public by any of their opposition parties that has done the trick.
The markets went nuts in the morning and have come back to sober territory since. The Nifty trades up about 2%.
The biggest victim of this time’s trade has been option owners. The VIX has fallen from 36% to 24%, and most call options (7200/7300 call) are trading even below the levels they were at yesterday, despite the 2% jump in the index!
Large caps have jumped substantially. Banks are up, as are industrials. The IT companies are down, and TataSteel is down nearly 4%.
(Click for larger image)
(Source: Trader’s Cockpit)
It’s going to be a fun set of days. Mind your stop losses, and keep your gunpowder dry. Never mind the metaphors. Basically, stay disciplined, and if you suddenly feel the need to panic buy, don’t.