Pre Market Report, January 22, 2016 | Stocks and Commodities

January 22, 2016
Time: 8.20 am

Pre Market Report:

1. US markets closed positive.
2. But it was highly volatile, Dow opened positive, then came to negative, then shot up by about 350 points from intraday low and in the last one hour came down heavily and threatened to go negative then recovered some ground and closed more than 100 points.
3. In last one hour though Dow did not go negative, Nasdaq turned negative and then finally closed positive.
4. Asian markets which lost lost huge ground yesterday at closing, now reacting positively.
5. Yesterday futures traders have expected this and that is why Nifty futures were trading at 20 points premium to the Cash for the first time in this year.
6. I also mentioned yesterday evening that though Nifty closed at 7276, Nifty 7300 Put had the highest open interest among Puts.
7. Nifty is facing stiff resistance around 7400. Few times it fell from that level in the last few days.
8. So the range for Nifty is between 7240 and 7400.
9. If 7240 breached on the downside, markets will go for free fall.
10. On the other hand, if 7400 is breached on the higher side, there will be huge short covering.
11. We saw the power of short covering in the first 5 minutes yesterday, Bank Nifty shot up by 450 points within minutes.
12. Though markets have been highly volatile, it is trading within the range of 7200 to 7400.
13. So far corporate results are good, with the fall in prices, the valuation for many stocks seems to be good. That may put floor for the fall.
14. ITC results are due today and since it is a an index heavy weight will affect the market.
15. Out of the two stocks which were holding during the turmoil, Infy and Reliance, Reliance started falling, so only Infy is holding the Fort.
16. So expect another day of volatile trade and sharp move on either side in the last one hour ahead of the weekend holidays.
17. Watch for VIX movement, if it crashes by more than 10%, then markets will stabilise and may inch higher even towards 7500 in the next few days.
18. On the other hand, if VIX does not fall significantly, then markets will be more volatile for the next few days.
19. Remember when markets opened gap up yesterday, FIIs have sold heavily, the highest sell figure this year.
20. So we need to see if any such severe selling happens today also.