Pre Market Report, August 7, 2019 | Stocks and Commodities

August 7, 2019
Time: 8.15 am

Pre Market Report:

1. US markets closed higher as China stabilised its currency.
2. But Asian markets ate not following US.
3. Asian markets are mixed.
4. SGX Nifty is down by about 50, 60 points.
5. Right now SHX Nifty is trading around 10910 which is about 150 points lower than yesterday's high.
6. Markets are high volatile, making 200, 300 point moves.
7. Usually this kind of huge volatility will be followed by major move.
8. That major move is going to be on the higher side or lower side is a billion dollar question.
9. Yesterday markets shot up within few seconds of opening.
10. But at the end of the day FIis have sold for Rs 2000 crores in Cash market.
11. This FII selling of Rs 2000 crore almost on everyday basis is a big problem.
12. In 4 trading sessions of August, FIIs have sold for Rs 8000 crores.
13. Despite DIIs buying for equivalent amount in Cash market, due to bad sentiment, markets are struggling.
14. Govt inaction with regards to addressing Economic problems and FPI Tax surcharge is adding fuel to the fire.
15. Govt seems to have started working slowly, there are some news about NBFC asset buying.
16. But everything is in discussion stage only, no official announcement has come.
17. I feel that RBI may go for 50 basis point rate cut or 25 basis point with some other cut like CRR, SLR etc.
18. Or they might go for dovish commentary.
19. As Govt is determined not to let the markets to crash while FIIs are determined to bring the markets down, this RBI rate cut of more than expected figure of 25 basis point will help the market sentiment to improve.
20. But Rupee movement has to be watched keenly as China may weaken its currency slowly as a proxy war with US.
21. India Bulls Housing Finance came with results yesterday after market hours.
22. ATM straddle is trading at 20% premium.
23. Means market expect this stock to move 20% on either side, such a volatile stock.
24. I just sold 600, 620, 640, 660, 680, 700CEs.
25. I also have some straddles at 480 and 520.
26. First 3 hours of trading is going to be volatile and after that RBI decision will decide the market direction.
27. I sold 11200CE in weekly Nifty options at Rs 8 and it closed at Rs 4.
28. Unless there is a big short covering after RBI policy, this is likely to go to 0.
29. Bank Nifty option premiums are too high due to RBI policy.
30. After the policy premiums are likely to go down.
31. I sold 27000PE, 27200PE and 28500CE in weekly options.
32. I sold 28500CE at Rs 70, day before yesterday, I may keep SL for that and if SL is trifggered I may move to 28800 or 29000. SL is likely to be triggered only after RBI policy.
33. Downside, I do not think there will be any problem.
34. In case of violent move on the downside, I may have to exit.
35. Markets will not see significant recovery without Reliance recovery.
36. Reliance has been very weak or FIIs just keep selling index heavy weights to bring the markets down.
37. Now markets may trade in a broad range of 10800 and 11100 for the next few days.
38. One interesting thing about this expiry, which I have not seen anytime before, both 11000PE and 11000CE have highest open interest among Puts and Calls.
39. Usually OTM options only will have highest OI.
40. Either people are shorting and buying 11000CE or taking long position and buying 11000PE for protection, expecting a bigger move in market on either direction.
41. Or simply people are buying both CEs and PEs thinking market will make a bigger move on either side.
42. Some dare devils are selling straddles by thinking markets will go nowhere as FII and DII keep fighting with equal power.
43. Let us see who will be right after few days.
44. Be ready for roller coaster ride due to RBI policy.
45. Nifty future may trade between 10880 and 11020.