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| P R Sundar, Aditya Trading Solutions |
Time: 7.30 am
Premarket Comments:
- FII continue to sell aggressively, selling Rs1373 crores in cash carket and about Rs 500 crores in futures market.
- Yesterday US markets fell and closed at the lowest end of the day, which is not a good sign. The selling is likely to continue. Moreover the fall in the second part of the US trading will affect the European markets in the first part of the day today.
- For the last many days although US markets have been falling, Nasdaq has been outperforming Dow. But yesterday Nasdaq fell more drastically than Dow, which shows quality stocks are coming under pressure.
- Syria problem is escalating and Brent Crude oil is trading above US$115 for the first time in the last one year, which is very bad news for India.
- SGX Nifty is trading about 70 points lower.
- Initial panic is likely as 5250, an important technical level, will be broken at the opening itself.
- Rupee is trading closer to 67 in overseas market. Breach of 67 during trading hours will create more panic. Yesterday Rupee fell the most in last 18 years.
- Even during Lehman collapse time, HDFC and HDFC bank did not fall by 10%. Now they are falling. This shows that there is redemption pressure in foreign funds. Whenever redemption pressure increases, the market will take more time for recovery.
- Brazil market fell 2.6% and now Indonesia is trading about 3% lower. This time Brazil, India and Indonesia are facing worst FII outflows.
- Advised to sell Bank Nifty Call option, Nifty Call option, ICICIC Bank, HDFC Bank, Axis Bank Call options and Infy Put option.
- All of them are in good profit and can be left open until expiry.
- Place stop losses to avoid any losses in case of short covering.
- Sell 5400 Call option at the opening, which may trade between 5 to 6 Rupees. Since there are only two trading sessions left and even in case of short covering, the index may not cross 5400, as the global cures are very bad. One can pocket the entire premium by leaving the contract to expire.
- During the market, if the rupee breaches 67 and by panic if the market falls suddenly, below 5200, then sell 5000 Put option. The expiry will be between 5000 and 5400.
- Short selling is not advised as there may be short covering at any point of time due to expiry.
This is the right time to buy quality stock at cheaper price. Downside from here is not much. Last two times index touched 4500 due to global economic problems. Now globally there is no major economic problem. Even during yesterday's such a fall in all markets, China index closed positive, due to favorable industrial data.
Even yesterday data from German and US were good. Markets fell due to Syria tension will will come to end one day. In fact in the last one month, data coming from China and Europe are showing that both China and Europe are stabilising. US is already in good shape.
FIIs can not continue to exit India as they have already lost over 75% in dollar terms. So selling will subside soon. Currency depreciation will have some positive effects also, but that will be reflected in the economy with a lag.
One can buy PSU Banks offering decent dividend yields. One can buy Capital Goods stocks also as capital goods sector will have to turn around first in the economy.
Recommendation:
1. Allahabad Bank
2. Andhra Bank.
3. L&T
4. Oil India
5. SBI
Buy in small quantities and average at lower levels.
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