Pre Market Report, September 14, 2015 | Stocks and Commodities

September 14, 2015
Time: 8.45 am

Pre Market Report:

1. I could not write 'Pre Market Report' on Friday as there was some problem with my internet connection.
2. FIIs after giving a pause started selling once again, they have sold for more than 700 crores on Friday.
3. US markets closed higher on Friday.
4. Not only that, US futures are trading positive right now.
5. That is adding some optimism to Asian markets.
6. As usual China is very volatile.
7. Asian markets are mixed.
8. SGX Nifty is also volatile, hit a high of 7847 and hit a low of 7785 and now trading around 7800.
9. Meanwhile our economic data has been good.
10. IIP data was above expectation.
11. Indirect tax collection is up by 30% which is also very good.
12. Today WPI inflation data is likely to come at minus 4% and today evening CPI inflation data is likely to come at 3.5%.
13. These economic data may support our market in the very short term.
14. But on a weekly basis, it is all Fed.
15. Billion dollar question is whether Fed will increase the rate or not?
16. One group of people feel that the fed rate hike has already been factored into the market and hence whether they hike or not, markets will recover.
17. Another group of people feel that whether they hike or not, markets will continue to fall. Reason: If they hike rate, money will flow out of Emerging markets which are already fragile and hence markets will fall. If they do not raise the rate, it means that Fed feels that US economy is not in good shape, already China's economy is not in good shape, so markets along with commodities will continue to fall as two largest economies are not in good shape.
18. So things will be clear only by next week.
19. In case of drastic falls on Friday, Govts all over the world may do something during the weekend.
20. That is why I am saying things will be claer only next week, not this Friday.
21. If Fed hikes rates and if US markets react too much and if on Friday morning Aisan markets react too negatively, RBI may cut rates by Friday morning itself in order to stablise the markets.
22. It all depends on how much fall is considered as dramatic fall for RBI.
23. So it is all uncertain for the next one week.

Mr K S Saravanan has commented that I am moving from 'Short Stangle' to 'Long Strangle'.

That is not true.

Markets tend to fall unreasonably once in 7 to 8 years.

In 1991, we saw Harshad Mehta scam.

In 2000, it was dot com bubble.

In 2008, it was US Economic resccession.

In 2015, it is China slowdown. We do not know whether this is a normal correction or full blown out bear market kile 1991, 2000 and 2008. Only time will tell.

So it is better to be cautious.

I have never advised buying of Call or Put option.

Buying is advisable for very short tem like intraday or one or two days, if you are very sure of the direction.

For example, on 25th August when the markets were in absolute panic, Nifty gap down by about 200 points, there was no trade in 8000 Put option (there were only buyers, no sellers due to circuit filters) The momemt circuit filters were removed, I saw 8000 Put was trading around Rs 63. Those who have bought would have made good profits provided they exited in the next one or two days. Those who held to maturity actually lost as Nifty expired around 7950.

Due to SEBI guidelines, I have stopped giving suggestions for selling options.

It is time to be cautious does not mean that you are to buy options.

This time I have advised my clients to sell Dec 6000 Put option and Dec 9000 Call option.

No matter what is the outcome of Fed, Nifty is likely to trade between 6000 and 9000.