Pre Market Report, June 28, 2016 | Stocks and Commodities

June 28, 2016
Time: 8.30 am

Pre Market Report:

1. US markets fell for second day.
2. Dow fell nearly 1000 points in two days.
3. Most European markets have fallen by 15% in two days.
4. I was also worried yesterday night when SGX Nifty fell below 8000.
5. I have lot of Bank Nifty 17000 Put options.
6. A gap down of more than 100 points in Nifty means nearly 300 points gap down in Bank Nifty.
7. But a surprising thing in US markets was that despite such a big fall, VIX has crashed by 8%.
8. This is the second time in US history that VIX fell more than 5% when markets fell by more than 1.5%.
9. A crash in VIX means the huge volatility may be over.
10. Hereafter the fall or rise will be grdual.
11. After the market hours, US VIX fell by another 4%.
12. Dow future is trading about 100 points higher.
13. Most European fututres are also trading higher.
14. Japan's Nikkei has recovered more than 300 points from intraday low.
15. China, Korea, Taiwan and Singapore markets are in Green.
16. So SGX Nifty has also recovered 70 points from intraday low 8013.
17. Crude prices are up due to a possible strike by oil workers in Norway.
18. Only yesterday morning I mentioned about seventh pay commission and it was in the nes papers yesterday.
19. Monsoon progress also seems to be very good.
20. Once this Brexit issue is digested, markets are likely to move higher.
21. This is assuming that there are no more negative implications due to Brexit.
22. In the worst case scenario, European markets were expected to fall by 20% to 25%.
23. But thay have already fallen by 10% to 15%.
24. STerling pound has already fallen by about 15% from recent peak.
25. So most of the negatives have been factored in.
26. Brexit will take about 2 years to implement.
27. It is a long drawn process.
28. So markets can not be falling like this for next two years.
29. So markets will stabilise at some point.
30. We have many local triggers like (i) Good Monsoon, (ii) Seventh PAy Commission, (iii) GST, (iv) Corporate results, (v) Reform initiatives by Govt, etc.
31. SGX Nifty is trading at 8070.
32. Last expiry was at 8070 and after that Nifty has not closed below that level so far in June.
33. But markets tend to make big moves in the last few days of expiry on either direction.
34. Let us see where the Nifty closes today.
35. FIIs have increased their short position which is actually good.
36. In case of some positive trigger markets will shoot up due to short covering by these people.
37. It is the same set of people who created large long positions before Brexit who have lost hugely.
38. Nifty 8050 is the level to watch on the lower side.
39. SInce Europe is likely to open positive in the afternoon, markets may be in a better position in the afternoon.
40. But during this time, nothing can be said, things can change within few minutes.
41. When we closed here at 3.30 pm, Dow futures were down only by 50 points only and nothing happened after that but Dow fell more than 300 points when US markets opened at 7 pm.
42. Yesterday both FIIs and DIIs were net sellers in Cash market and that is a real bad news for bulls.
43. But good thing is that FII selling was just little over 100 crores, a small figure compared to more than 600 crores on Friday.
44. Retail people seems to be more bullish than FIIs and DIIs.
45. Yesterday for the first time in the last many days, India VIX fell and the trend may continue.
46. Yesterday all out of money Nifty option premiums fell.
47. So as I said earlier, option buyer always lose money when they hold positions for a longer time.
48. Option buy is only for short term traders who judge the trend correctly.