Pre Market Report, September 30, 2015 | Stocks and Commodities

September 30, 2015
Time: 8.50 am

Pre Market Report:

1. US markets closed mixed with Dow and S&P 500 up and Nasdaq down.
2. Most Asian markets are marginally higher.
3. Yesterday's RBI policy has become a non event.
4. Despite 50 basis point cut in interest rate, Nifty was up less than 50 points.
5. Bank Nifty was just up by about 1%.
6. Even without rate cut, Nifty was taking support at 7700 and resistance at 8000.
7. Now the range remains the same.
8. Nifty has been trading in the range of 7700 to 8000 with huge volatility.
9. Usually after such a big event, VIX should fall considerably.
10. But yesterday VIX did not fall much, VIX was down just by 0.45%.
11. This shows that the other risks remain.
12. This is just the first week, we have done with only two trading sessions in this series, we have 4 more weeks to go.
13. Coming to RBI policy, very few expected 50 basis points.
14. This is good for Real Estate, Housing Finance, Auto, Banking and Infra companies.
15. But Real Estate shares rise will just be limited short covering. I do not think the houses will be affordable to common man when interest rate go down by 25 basis or 50 basis points. The real estate prices are unaffordable in India right now by any standard.
16. How one can justify the prices of apartments not less than 1 crore rupees in Mumbai. In most countries, a couple working as waiters in restaurants, without any skill can afford to buy a house.
17. It is the land prices in India that matters not the interest rates. Real estate prices softened in 2008 and expect no recovery at least for another 5 years.
18. Yet Housing finance companies are likely to do well as tier 2 and tier 3 cities also go for housing finance.
19. In Auto Maruti and Ashok Leyland will be the major beneficiary. Tata Motors has China problem and M&M has Tractor sales problem. Also M&M is struggling with SUV sales. The recently launched TUV 300 has not excited the markets.
20. Though Banking will be the beneficiary, stock markets are all about going long and going short in Banking stocks. So these stocks may out perform in the long run, in the short run, it will dance to the tunes of Global markets.
21. Infra stocks are also similar to Real Estate stocks, the upside will be limited to short covering.
22. US markets went very close to August low and recovered a bit.
23. After 2008, for the first time, this year US markets may give negative return. ( In 2011, US markets gove negative return but less than 0.01%, that is almost flat return)  
24. Tata Motors has been downgraded, so Tata motors, Bharat Forge, Matherson Sumi, Amtek Auto all doing badly in this correction.
25. So technically, people expect one more down move that may break previous low before any secular uptrend sets in.
26. I do not know how far this can be true.
27. But for next three months, until the end of December, markets may be trading in a range of 7400 and 8100 with huge volatility.
28. Last series ended almost flat though markets were highly volatile.
29. But October will be more volatile due to corporate results and long series (5 week month).
30. Today Nifty should take support at 7820. Resistance will be at yesterday's high.
31. Yesterday FIIs have sold for more than 1000 crore.
32. In the very short term, the downside will be limited to 7700 as most of the weaker hands are out.