Pre Market Report, September 14, 2016 | Stocks and Commodities

September 14, 2016
Time: 8.10 am

Pre Market Report:

1. On Monday, markets reacted in line with our expectation.
2. Nifty future hit a low of 8727, then recovered a little bit.
3. But after the market hours, CPI Inflation data came much better than expected around 5% against 6% last month.
4. This one along with negative IIP data increases the case for rate cut by RBI in October 4 meeting.
5. This will be good for banking stocks, banking stocks may stabilise and may not fall severely from here.
6. Fed deputy governors were giving conflicting signals about rate hike.
7. That will stop from today as they go for Silence period from today where nobody is allowed to speak about rate hike.
8. The probability of rate hike has come down to just 15% in September.
9. Yesterday US markets fell mainly due to two reasons.
10. One, Oil prices fell and that is actually good for India.
11. Second, Banking stocks fell as the chances of rate hike keeps going down and that is also good for India.
12. Most Asian markets are trading between Green and Red.
13. SGX Nifty is trading around 8755, just 10-15 points higher than Friday's close.
14. Today markets may react to WPI Inflation data also which will be released around 12 noon.
15. On Monday India VIX shot up by 15%.
16. FIIs have sold but DIIs did not buy.
17. That is a negative as usually in this kind of panic, DIIs bused to buy.
18. FIIs have bought options worth 5578 crores and clearly this reflects the fear in the system.
19. Few months before, Nifty was trading between 7700 and 8000 with huge volatility.
20. And that may happen now, markets may trade with huge volatility between 8700 and 9000.
21. The fear of another big gap down today has not materialised and hence India VIX may cool off a little bit.
22. Market is still behaving in a rational manner, in my opinion.
23. Look at the stocks that fell more than 5% on Monday.
24. First, Real estate stocks like HDIL, DLF etc, they fell due to poor corporate results declared during the weekend.
25. Next, metal stocks, they fell due to global cues, anyway those stocks rose by 80% to 100% in the last few months.
26. Then some stock specific news like Rel Infra fell due to notice from DRI, YES Bank fell due to failed attempt of QIP, etc.
27. IT stocks and Reliance were up despite such a bad fall.
28. Markets may trade within the range of 8700-9000 with huge volatility until next Wednesday until FOMC decision is clear.
29. Corporate results season has almost come to an end.
30. After WPI inflation data, there are no important economic data until the end of this expiry, except US rate hike news.
31. So markets may move according to global cues.
32. Crude oil inventory data tonight from US will be watched keenly as US markets fell yesterday due to Crude oil price fall.
33. One can sell Nifty 8600 Put and 9000 Call to ride the volatility.
34. Nifty 8600 Put shold be held as long as Nifty future trades above 8700, once Nifty future breaks 8700, Nifty 8600 Put should be shifted to Nifty 8400 Put.
35. Nifty future may trade between 8720 and 8820.