Pre Market Report, April 13, 2016 | Stocks and Commodities

April 13, 2016
Time: 8 am

Pre Market Report:

1. US markets are up significantly.
2. Asia markets are all trading firmly in Green.
3. China's export shot up by 11% against a decline of 25% last year.
4. So the economic indicators are all showing some kind of revival both in India and China.
5. China is very important as that is the party spoiler for bull markets.
6. Two weeks before, core sector growth data was good in India.
7. Yesterday that was reflected in IIP growth.
8. So Capital goods stocks will be in focus. Watch BHEL, L&T and a midcap stock Sunil Hitech.
9. CPI inflation data also came lower than expected, below 5%.
10. IMD also came out with a very good forecast for monsoon.
11. Yesterday I did mention that "markets are likely to consolidate today and after the IIP data and CPI inflation data markets are likely to gap up or gap down".
12. Today Nifty is likely to gap up by more than 60 points if SGX Nifty is an indication.
13. Crude prices up at 2016 high, positive global cues, good economic data from China all contributing to positive sentiment.
14. SGX Nifty is trading above 7800.
15. But I expect some kind of selling intraday.
16. Even yesterday afternoon, there was some selling, a decent fall of more than 40 points in NIfty and then only markets shot up.
17. It is difficult to trade huge gap up.
18. First, from Monday at 1.30 pm to today 9.30 am, it is only less than 10 hours of trading but Nifty is up by about 300 points.
19. So profit booking may come anytime due to long weekend.
20. On the other hand, still huge shorts are left in the markets.
21. FIIs have sold index futures for 700 to 800 crores from last Tuesday but buying was only 100 to 200 crores in the last two days. So if they decide to cover the shorts, markets may even go to 7900 in a short period of time.
22. So it better to play in options.
23. Consider selling Nifty 7800 Put and Call options when Nifty future trades around 7800.
24. Since there are only 8 more trading sessions after today and markets recovered 100% of the fall due to RBI policy, markets may go for consolidation after this.
25. Today Nifty future is likely to face resistance at 7820.
26. Support will be at 7740.