Pre Market Report, November 16, 2015 | Stocks and Commodities

November 16, 2015
Time: 8 am

Pre Market Report:

1. Asian markets are all down.
2. SGX Nifty hit a low of 7706 but now trading around 7725.
3. Highest open interest of more than 50 lakhs among Puts is at 7700 and Calls is at 8100.
4. So markets may take some support in the region 7680-7720 for few days before breaking down.
5. Today markets will be volatile until WPI data is out.
6. Since the results season is over, there will be no stock specific shocks.
7. Stocks of companies that declared good results will out perform when the markets fall.
8. Stocks that are likely to out perform are Maruti, Bajaj Auto, Ashok Leyland, Kotak Bank.
9. Though Reliance declared good results, it may not out perform as it is in the commodity business.
10. Both Sector as well as good results are required for the stock to be bullish.
11. FIIs have sold options heavily, so in the short term the chances of market recovery is very little.
12. Since the markets are very bearish and that is likely to continue into December series, people are creating Calendar spread position.
13. Calendar spread is done like this: Sell 7600 Put option in November series and Buy 7600 Put option in December series. The outflow will be about Rs 75. 
14. Since 7550 is the swing low, if that is broken, Nifty may go to 7200. In that case above position will give good profit.
15. In case if markets bounce back and goes up, then the loss will be Rs 75 per share.
16. But some people are part financing this Rs 75 out flow by selling December 8200 Call option and November 8000 Call option.
17. In this case the out flow will be just about Rs 10 per share.
18. But Nifty should not go above 8000 in this month and above 8200 by end of December.
19. But chances are very low for this to happen.
20. Mostly people with good portfolio do this in order to protect the folio.