Pre Market Report, November 19, 2015 | Stocks and Commodities

November 19, 2015
Time: 8.15 pm

Pre Market Report:

1. US markets shot up by about 1.5% despite Fed minutes reaffirmed the December rate hike.
2. Usually when such a big thing happens, markets discount that way before the actual event.
3. In fact world markets are adjusting for this since may 2013.
4. All commodities have fallen anywhere between 50% to 75%.
5. Some times, I wonder why such a fall is required when US raises its rates 0.25%, in fact the total hike is going to be only 2% over a period of time.
6. Then markets are all about over pessimism to over optimism.
7. That is why prices swing so much.
8. Asian markets are all up.
9. Yesterday I mentioned that the reaction was a over reaction here.
10. Now SGX Nifty hit a high of 7800 and now trading closer to that level.
11. All those who went short yesterday will be scrambling to cover the shorts today.
12. Yesterday panic created was so powerful that Nifty closed at the lowest point in this series on closing basis.
13. This happens almost every month.
14. People who create positions through the first three weeks with hedged positions may tend to loose more money (or tend to gain more money) when markets make big moves in the last few days as hedging with options will not be very effective as option premiums will be very low due to time value, so the exit all the positions by placing basket orders.
15. So markets move irrationally, usually this happens either on Thursday or Friday the week before expiry week.
16. They carry positions until expiry only when they are very sure about the direction of the market.
17. Option sellers viewed yesterday's price action as a blip and the open interest were up despite markets falling and the VIX did not shoot up.
18. So chances are very high that yesterday's close is the lowest for this series.
19. Except Infosys, there were no major delivery based selling yesterday.
20. So it was all done by F&O traders.
21. Today Nifty future is likely to trade between 7720 to 7840. 
22. More than the Nifty movement, we have to see how India VIX moves.