Pre Market Report, February 2, 2017 | Stocks and Commodities

February 2, 2017
Time: 8.30 am

Pre Market Report:

1. US markets closed higher after falling for two days.
2. Asian markets are mixed but most of the markets are up.
3. But SGX Nifty is lower, trading around 8705.
4. Yesterday, there was so much expectation, both on positive and negative sides, but nothing has happened.
5. "No bad news is a good news" for stock markets.
6. No increase in STT as speculated by the media and no tinkering in Long Term Capital Gains Tax.
7. These two helped markets to recover the lost ground and then good results from ICICI Bank and short covering fuelled the fantastic rally, the budget day rally that was not seen since 2005.
8. Even yesterday night ICICI Bank ADR was up by 7% in US.
9. So Axis Bank and ICICI Bank which have hugely under performed in the last few months may do well in the near future.
10. But the shocking news is that despite such a big rally, FIIs did not buy in Cash market for significant amount.
11. They have bought for less than Rs 100 crores in Cash market and they are net sellers in Index futures and stock futures.
12. But they have bought options in huge quantities.
13. Usually DIIs will book profits when when markets have made a huge rally, but this time they keep buying despite 800 points rally in the last one month.
14. In fact I have not seen this kind of buying momentum by DIIs in the last 10 years.
15. So we may well assume that people are losing confidence in Real Estate and Gold and part of that money is flowing into Mutual Funds.
16. Markets may consolidate for next few days after a spectacular rally yesterday.
17. The next big trigger is RBI policy next Tuesday.
18. RBI may cut the rates by 25 basis points and if that happens, Bank Nifty will move higher.
19. I have sold Bank Nifty Put options from 19000 all the way to 17500.
20. Hoping the VIX to go down further after the RBI policy.
21. Yesterday India VIX fell 17% and all those hugely gambled by buying options have lost hugely.
22. On the other hand, option sellers have made huge money.
23. Bank Nifty 18000 Put I sold for Rs 50 the day before yesteray, settled around Rs 14 yesterday.
24. With all the Private Sector Bank results out, markets will focus on Public Sector Bank results and RBI policy.
25. Nifty future now is a buy on dips play.
26. Nifty future is likely to trade between 8680 and 8780.