Pre Market Report, December 23, 2016 | Stocks and Commodities

December 23, 2016
Time: 8.15 am

Pre Market Report:

1. US markets closed lower on thin volume ahead of Christmas holidays.
2. Asian markets are mostly lower but marginally.
3. SGX Nifty is trading around 7970, lower than yesterday's low.
4. Yesterday's fall was unexpected though some kind of selling was expected due to huge selling by FIIs.
5. Since most FIIs will go for holidays next week and since they will close their books by the end of this month (as their FY is from January to December), there is accelerated selling by FIIs this week.
6. Yesterday FIIs have sold for Rs 614 crores in Cash market, so far they have sold for more than Rs 2500 crores this week.
7. Yesterday, after a long time, FIIs were net sellers in all 5 segments, Cash, Index futures, Index options, Stock futures and Stock options.
8. DIIs bought for Rs 320 crores which did not match the FII selling.
9. Yesterday Nifty low was 7965 which was the closing level of January 1, 2016.
10. Today, if markets fall, then it will be the eight consecutive day of fall for Nifty.
11. But I expect some kind of short covering rally towards the end of the day, if markets are weak in the morning.
12. Usually when markets fall continuously, there will be huge short sellers who will like to close their trades on Friday evening.
13. Usually that will trigger some kind of short covering, if that happens today Nifty should close in Green at least.
14. At the same time, today is the last opportunity for FIIs to sell and I expect some selling towards the end of the day, if markets are positive in the morning.
15. Anyway, today's market is going to be volatile.
16. Volatility index is likely to move higher.
17. Still I believe that Nifty will not expire below 7920.
18. I am still holding Nifty 7900 Put with Calls at 8200, 8250, 8300 and 8350.
19. HDFC Bank is holding when most banks are down, so Bank Nifty will see panic if HDFC Bank start falling.
20. So I went short in HDFC Bank as hedge. I went short in HDFC Bank January future at 1180 and sold December Put of 1180 at Rs 11.50.
21. Yesterday's trade was more like Expiry day trade, the volatility was so high, Axis Bank shot up by Rs 6 in the last 10 minutes, Asian Paint shot by Rs 20 after 2 pm.
22. We will see more such trades today afternoon also.
23. Everything looks bearish, markets are falling for 8 consecutive days, so this may be the best opportunity for short sellers to square up their trades.
24. Moreover, since we are close to the expiry, option prices would have gone down.
25. About 2 weeks before, I went short in HDFC Bank at Rs 1190 and sold 1180 Put at Rs 20, 1160 Put at Rs 11.
26. Yesterday HDFC Bank closed at Rs 1175, giving Rs 15 profit. HDFC Bank 1180 Put closed at Rs 11, giving Rs 9 profit, 1160 Put closed at Rs 3, giving Rs 8 profit. So total profit is Rs 32, giving a total profit of over Rs 15,000 per lot. So I am planning to square up this trade at the end of the day or if HDFC Bank crosses 1190.
27. So this kind of buying will trigger some short covering.
28. Let us see what happens.
29. GST council meeting starts at 11 am. If there is any positive news from that meeting, that will become atrigger for short covering.
30. So today's trade, particularly afternoon trade, is very important for the direction and expiry of this month.
31. Nifty future should take support at 7940 and resistance will be at 8040.
32. Yesterday my prediction went wrong terribily.