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

May 4, 2016
Time: 8.30 am

Pre Market Report:

1. US markets closed once again in Red.
2. Yesterday's fall in all the world markets was attibuted to China's weak manufacturing PMI.
3. But China did not fall.
4. SGX Nifty is trading around 7750.
5. Nifty has corrected more than 250 points in the last few days.
6. Nifty is also falling continuously after Nifty future touching 8000, on closing basis.
7. Usually May month is a weak month for world stocks.
8. Markets should stabilise around this level.
9. If not, there will be more pain ahead.
10. Though yesterday Nifty fell nearly 180 points intraday, there was no big jump in Put option premiums.
11. This shows that people expect markets to stabilise around 7700.
12. Every time Nifty has also made attempt to move higher but failed.
13. There are no important quarterly results today.
14. Markets are likely to be very volatile, even yesterady there was a swing of more than 250 points in Nifty.
15. This trend may continue until world markets stabilise.
16. Today Japan markets are closed and most other Asian markets are down.
17. Nifty future is likely to take support at 7720.
18. Resistance will be at 7820.
19. We can expect some technical bounce back as Reliance, Infosys, ITC all index heavy weights corrected significantly in the last few days.
20. All these stocks have fallen more than 5% in the last few days.
21. Auto sector is showing some resilience.
22. Both Nifty and Bank Nifty are closer to support level, those who believe that there will be some bounce back may buy Nifty 8000 Call option and Bank Nifty 17200 Call option.
23. Nifty 8000 Call should open below Rs 40 today and Bank Nifty 17200 Call should open around Rs 100.
24. Closer to the expiry, I expect markets to be in a good shape as monsoon expectation will start building.
25. I expect Nifty to expire above 8000 and Bank Nifty to expire above 17200 this series, if there are no more external shocks.
26. After buying these options, if markets recover to some extend, then one can sell Reliance, ITC and Infosys Call options as hedge.
27. We can expect some recovery after some good data from US like ADP Non Farm Payroll data today, unemployment report on Friday, etc.
28. Let us see whether this strategy works this time.