Pre Market Report, May 31, 2017 | Stocks and Commodities

May 31, 2017
Time: 8.30 am

Pre Market Report:

1. US markets closed lower and Europe also closed lower.
2. But Asian markets are mixed.
3. China Manufacturing PMI is supporting the China market.
4. SGX Nifty is trading slaightly higher by about 10 points.
5. Market is ounishing the bad corporate results and rewarding good corporate results.
6. PFC, REC, BHEL all fell more than 10%, Auro Pharma was down by 10% in Pre Market.
7. All Pharma stocks shot up later as they were all trading at 52 week low and over sold level.
8. REC fell 10% in the morning, then shot up by 15% after the results. REC swung nearly 30% yesterday, such was the volatility.
9. I shorted REC at Rs 184, but managed to exit with a profit of Rs 20,000 by selling Put options once the results came.
10. FIIs were net sellers in Cash market but huge buyers in F&O market.
11. DIIs continue to buy and that is why markets are not making any big moves.
12. Markets have consolidated for the last three days.
13. Now the Monsoon news is also out officially, markets may breakout once again today or tomorrow.
14. This is the first time I am seeing, markets keep moving higher but India VIX also keep moving higher.
15. Last week I sold Nifty 9200 Put and 9800 Call, yesterday 9200 Put is trading at the same price but 9800 Call shot up by Rs 15.
16. That is the effect of VIX increase.
17. Yesterday Nifty December 8000 Put was up by Rs0.50 and Nifty 11000 Call was up by Rs 7.
18. So market participants think that there is going to be a big move on either side.
19. People are not interested to sell options due to 5 week expiry, that is also one of the reasons for higher premium.
20. Nifty 9400 Put has the highest open interest but the open interest is lower than historical averages.
21. Highest open interest itself is less than 50 lakhs.
22. Yesterday markets traded as expected, but that may not be the case today or tomorrow.
23. If Nifty future continue to trade firmly above 9620, then 9680 will be the target for this week.
24. I am planning to go long in Nifty by selling 9700 Put option which is trading at Rs 150. If markets continue to move higher, there will be a profit of rs 150, on the downside if Nifty breaks 9550, which is suppose to be a good support, I will go short in Nifty future and sell further 9400 Put option.
25. This is a high risk - high reward trade.
26. Today we can expect Nifty future to trade between 9580 and 9660.