Pre Market Report, February 3, 2015 | Stocks and Commodities

February 3, 2015
Time: 8.35 am

Pre Market Report:

1. US markets closed firmly in Green after Greece is reportedly working towards consensus instead of conflict with European debtors.
2. Crude price stabilising after a huge fall of more than 50% in the last few months also supported the markets.
3. Coal India did not fall much yesterday despite poor response to the issue.
4. That makes HDFC Bank confident of raising 10000 crores through QIP and ADR this week.
5. Since the issue size is too big, HDFC Bank may come under pressure.
6. If this issue goes through, it is a record for Primary markets as more than 32000 crores raised in less than a week.
7. Watch for Auro Pharma ahead of the results.
8. Today RBI policy and PNB results are the key events.
9. Who knows, RBI may go for another rate cut of 25 basis points or may tinker with other rates.
10. Though expectation is very low, there are few things that may go in favour of rate cut.
11. One, core sector growth that came yesterday was very poor.
12. Second, after Coal India issue, Govt. finances has improved.
13. Third, all over the world central banks are easing, now everyone is betting that China and Australia will cut rates.
14. 20% of the analysts expect 25 basis point cut whereas 80% expect status quo. (So far majority failed in Raghuram's case)
15. So either it is neutral or positive for markets.
16. PNB results are expected to be good, but we have focus on NPA.
17. Markets are likely to be slightly positive until 11 am and then RBI policy will dictate the trend.
18. Let me give one trading idea: At 10.45, see where Bank Nifty trades. If it trades closer to 20000, then sell one lot of 20000 Put and Call, if Bank Nifty trades closer to 20100, then sell one lot of 20100 Put and Call and so on. The premium will more than Rs 1100. The Span margin will be around Rs 25000. One can expect at least Rs 2500 profit which is 10% return on investment.
19. Caution: Above calculation assumes many things. One, you pay only Span Margin, most brokerages charge Exposure Margin also. Second you pay lower brokerage. I pay only Rs 10 per lot as brokerage whereas many people pay upto Rs 100 as brokerage. Third, I assume that you will be able to bring additional Rs 25000 in case our strategy fails, in order to do the delta hedging. Fourth, at the time of placing the order, there should an additional Rs 27500 in your account which will be released to you the next day. This is because, option premium will be due to you tomorrow, but option premium will added to Span margin which has to be paid today. This is a flaw in NSE system, somebody has to tell them.
20. Nifty future levels are difficult to predict due to RBI policy, PNB results and HDFC Bank issue.