Pre Market Report, December 7, 2016 | Stocks and Commodities

December 7, 2016
Time: 8.30 am

Pre Market Report:

1. US markets once again closed at record high, 11th record high after Trump win.
2. Asian markets are mostly higher.
3. SGX Nifty is trading about 15 points higher at 8180.
4. Yesterday once again Nifty failed to close above 200 DMA.
5. But one good news in yesterday's trade is that FIIs have turned net buyes in Cash market.
6. This is happening after nearly two months of selling and about Rs 24,000 crores worth of shares were sold in the last two months.
7. If this trend continue, we can say safely that Nifty has bottomed out at 7916.
8. Today it is all about RBI policy.
9. Nobody exactly know how this Demonetisation is going to play out.
10. How much money will come back to the banking system? Whether there will be any restriction for withdrawal after December 30? 
11. If allowed to withdraw, then entire deposit will be withdrawn, then there is nothing good for banks.
12. Today, more than the rate cut, markets will focus on RBI comment about CRR rollback, impact of Demonetisation effect on inflation and economic growth, etc.
13. So one thing will be sure, there will be huge volatility in the afternoon.
14. In case if there is 50 point rate cut, we can expect 300 to 400 point swing in Bank Nifty.
15. So for traders it is going to be very difficult.
16. Traders are advied to play with options than futures.
17. Volatility index may go down at the end of the day and will benefit option sellers.
18. Just on December 2, I bought Bank Nifty 18000 Put at Rs 350 and sold 17500 Put double the quantity at Rs 200. So I bought for Rs 350 and sold for Rs 400. Yesterday 18000 Put closed at Rs 230 and 17500 Put closed at Rs 115, thereby giving Rs 50 profit, which is 5% return for my investment in just two trading sessions.
19. So this is the power of fall in India VIX.
20. Crude and Gold are down.
21. We can expect paint companies and OMCs to do well.
22. IT is not expected to do well as Rupee is not falling.
23. Nifty future will gain momentum nly if it crosses 8220.
24. Nifty future may take support at 8120.
25. Resistance will be at 8220.