Pre Market Report, September 25, 2013 | Stocks and Commodities

P R Sundar, Aditya Trading Solutions

September 25, 2013
Time: 8.30 am

Pre Market Report:

1. Dow and S&P fell, Nasdaq was up just by the strength of Apple.
2. But the fall was limited.
3. Most Asian markets are also trading with negative bias.
4. HK, Singapore, China, Australia and New Zealand are trading positive.
5. SGX Nifty is trading flat.
6. Expected short covering came in yesterday morning, so weak shorts are out of the system now.
7. If the market goes down now, it will fall significantly, towards 5800.
8. Last two days FII selling in cash market was minimal, but we can never believe the FII data.
9. Sometimes, FIIs do not sell in cash market as it will bring down the market significantly and they would not be able to sell the shares at desired price level.
10. Instead, they will sell in futures market, keeping the cash market sales very low, then on the expiry day, they will reverse the trade.
11. No matter how much the market falls, they stand to lose nothing as the reversal trade happens at the same time.
12. In this way FIIs get the desired price for their selling.
13. So closer to the expiry, if FII selling is less in a falling market, then be prepared for a very volatile trade on the expiry day.
14. Today's market is also expected to be flat at the end of the day, though there will be roller coaster ride during the day.

 Recommendation:

1. If the market crosses towards 5950, then sell Nifty 6050 Call and if Nifty falls below 5900, then sell Nifty 5800 Put as the market is expected to expire between 5800 and 6050.
2. Sell Reliance 900 Call option. Reliance is expected to fall due to the dispute over gas price hike.
3. Sell Infosys 3100 Call option.