Breakout Day? Jan. 5, 2016 | Stocks and Commodities

Jan. 5, 2016
Time: 8.30 am

Pre Market Report:

1. On November 11, Nifty closed around 8320, then next day if fell.
2. After that Nifty struggled to trade abive 8200.
3. Even yesterday there was high hope for Nifty to close above 8200 but last minute selling dragged Nifty below 8200.
4. But global cues have been very good, most global markets keep rising.
5. But our market has been under performing the other markets for a long time.
6. For markets to breakout, either there must be a trigger in terms of positive newsflow or a gap up opening in Nifty.
7. Today it seems that both may happen, Fed minutes showed the concern for rising dollar and after the minutes, US dollar index inched lower.
8. That is a positive newsflow, SGX Nifty indicating Nifty future opening level of 8240 which is about 20 points more than the resistance level of 8220.
9. In addition, today is the Bank Nifty weekly expiry.ate
10. So gap up opening in Nifty followed by short covering in Bank Nifty will ensure a breakout in Nifty.
11. But continued selling by FIIs is a concern.
12. Yesterday FIIs have sold for Rs 800.71 crores while DIIs have bought for Rs 427 crores.
13. Despite FII selling figure was much higher than DII selling figure, markets were firm yesterday. Nifty was firm but most selling would have come in Banking stocks.
14. Yesterday SUN TV brokeout and that stock is likely to do well this month also.
15. I have long position in SUN TV.
16. For medium term, our markets will be more volatile.
17. There are many uncertainties for us like GST rollout delay, State Elections, Demonetidsation restrictions in Cash transactions, Election Commission view on Budget date, etc.
18. So if Nifty reaches the level of 8280-8320, then I am planning to "Buy March 8300 Call and Sell March 8500 Call double the quantity, Buy March 8000 Put and Sell March 7800 Put double the quantity".
19. As the market moves, I may continue to add positions.
20. Yesterday I shorted LIC Housing Finance at 520 and then sold one lot of 520 Put at Rs 18 and one lot of 500 Put at Rs 9 and one lot of 480 Put at Rs 4.50.
21. Today Nifty future may trade between 8180 and 8280.
22. There may be a sharp move towards the end of the day due to Bank Nifty expiry.