Low Volume and High Volatility, December 27, 2016 | Stocks and Commodities

December 27, 2016
Time: 8.15 am

Pre Market Report:

1. Yesterday most European and American markets were closed.
2. Today there are few Asian markets are trading.
3. Most of those markets are trading with very thin volume and trading almost flat.
4. Yesterday in our markets also volume was very low.
5. Due to the low volume, the volatility was high.
6. FII volume was only 50% of regular volume but they have sold for Rs 1095 crores.
7. But DII buying is equally aggressive, they have bought for Rs 1065 crores.
8. Now SGX Nifty is trading around 7920.
9. After falling so much, markets may consolidate for a day or two.
10. So I am not expecting any big moves on the downside today or tomorrow.
11. There may be some surprise on the expiry day.
12. That surprise may be on the downside or upside.
13. That depends on the FII selling today and tomorrow.
14. If today and tomorrow also they sell for more than 1000 crores, then there will be trouble.
15. On the otherhand if they stop selling there may be some short covering rally.
16. RSI for Nifty and Bank Nifty has come closer to 30 indicating oversold positions.
17. So technical bounce can come anytime.
18. Though FIIs have sold heavily in Cash market, there was no short selling in F&O.
19. Sometimes the sell figure may not be due to broader markets, may be due to some severe selling in one or two stocks like Divi Lab.
20. In Divis Lab alone there was delivery based selling of more than Rs 1000 crores in the last two days.
21. Highest open interest among Puts is shifted from 8000 to 7900.
22. 7900-7950 level has multiple supports.
23. So as long as 7880 is not breached, we can expect some kind of short covering.
24. So broadly we can expect Nifty to trde between 7820 and 7980 until expiry.
25. High beta stocks fell, particularly Real Estate stocks.
26. Benami property noise will make sure Real estate stocks will be under Bear control.
27. Come Janury, we will be completing 9 years of bear market, remember our market fell on in Jan 2008, but many Real Estate stocks are trading 75% to 90% lower even after 9 years.
28. Markets will continue to be volatile next three days.
29. Better play with January options instead of Decmber options.
30. I am giving a strategy: Buy Feb. expiry Nifty 7900 Put one lot and sell 2 lots of Feb. expiry Nifty 7700 Put. There will be a profit of Rs 45 per share if Nifty does not fall below 7500 by Feb.2017.
31. If markets move higher by 100 to 150 points in one or two weeks time, by time value, we will get the same profit.
32. If markets continue to be bearish, if Nifty continue to grind lower and closes at 7700 by Feb. end, there will be a maximum profit of Rs 245 per share.
33. If you are sure that markets are not going to recover, you may sell one lot of 8500 Call also.
34. Today Nifty future may trade between 7960 and 8060.