Pre Market Report, March 4, 2016 | Stocks and Commodities

March 4, 2016
Time: 8.40 am

Pre Market Report:

1. US markets closed in Green after a volatile session.
2. But US markets closed at the highest point of the day and that is very positive news as this has happened just before US Jobs data.
3. Asian markets are marginally higher.
4. SGX Nifty is trading around 7475.
5. People are expecting markets to consolidate after such a huge rise, but that is not happening, markets keep moving higher.
6. I was told that in 1998, Nifty shot up by 25% in 13 trading sessions.
7. But things are different now, there were no F&O that time, markets were not as wide as now.
8. A simple analysis will show why this market is not consolidating, forget about correction.
9. First, it is not India specific rally, all the world markets are rallying, in fact there are some markets which have rallied over 10% in the last one week.
10. Second, we hugely under performed in the last two months, so it is natural that we catch up with world markets.
11. Third, usually people short the market when Nifty futures turn to discount, usually it is a sign of a weak market.
12. So people are shorting for two reasons, one Nifty future is trading at discount, second the rise was very sharp and people expect some correction.
13. But the Nifty future is trading at discount due to the new tax on dividend issue, not because of weakness of the market.
14. So the more the people short, the more the rise as these short sellers' stop losses keep triggering.
15. If there is any consolidation or a small correction, that should happen at the end of the day.
16. We must be prepared for a sharp move towards the end of the day.
17. Nifty 7000 Put has almost 80 lakh shares in open interest and that seems to be a very good support, still having premium of about Rs 30. The premium of Rs 30 will give a return of more than 10% for the Span margin paid.
18. Nifty 7500 Call has the highest open interest, so if crosses 7520, next wave of up move will unfold.
19. But that may not happen today.
20. If US jobs report is good and if US markets rise significantly tonight, then this may happen on Monday.