Pre Market Report, July 6, 2017 | Stocks and Commodities

July 6, 2017
Time: 8.15 am

Pre Market Report:

1. US markets ended mixed once again.
2. Earlier it was one day up one day down for US markets.
3. Now it is one day Dow up-Nasdaq down and next day Nasdaq up-Dow down.
4. Asian markets are mostly flat with some positive and some negative bias.
5. Coming back to our markets, yesterday for the first time in the last many days, FIIs turned net buyers in Cash market.
6. It was a narrow range trade yesterday, markets are consolidating after the breakout on Monday.
7. Everyday one or two stocks contributing to the bullishness, one day ITC, next day Reliance, next day ICICI etc.
8. Yesterday Bank Nifty out performed Nifty after few days of under performance.
9. Today Bank Nifty is likely to be volatile due to weekly expiry.
10. Combined premium of 23300 Put and 23400 Call is about Rs 100 while Bank Nifty spot closed at the midpoint 23350.
11. So these option sellers will make good money if Bank Nifty trades sideways between 23200 and 23500.
12. Bank Nifty is expected to trade in this range only, at least until afternoon, so that these option sellers eat the premium.
13. Trending is expected only if this level is breached, even then it can be another 100 point move only.
14. Highest open interest among Nifty Puts is shifted from 9400 to 9500.
15. There was unwinding of 9700 Call. This indicates that the Nifty range is shifting from 9400-9700 to 9500-9800.
16. Also the open interest at 9500 Put is almost double that of open intesrest at 9700 or 9800 Call.
17. This indicates the bullishness, that is why I sold Put options from 9400 all the way to 9000.
18. SGX Nifty is almost flat and it is good for Option sellers in Weekly options of Bank Nifty.
19. Always flat open enable the Option writers to place stop loss orders.
20. Gap up or Gap down is a problem for Option writers.
21. Bank Nifty will become more bullish for many reasons, (i) it has under performed Nifty in the last few days, (ii) weakness usually come from PSU Banks but first det of corporate results before the end of this expiry will be from Private Sector Banks. (iii) RBI policy meet in the first week of August will be factored in towards the end of this expiry.
22. I expect Bank Nifty to cross 23800 at some point in this expiry.
23. Hence I am selling Put options at 22500 and 22000, to be on the safe side.
24. I sold 22500 Put at Rs 100 just two days back, now trading around Rs 60, a profit of about Rs 40.
25. Similarly 22000 Put sold at Rs 45 now trading around Rs 25, giving Rs 20 profit.
26. Today Nifty future may trade in a tight range of 9620 and 9680.
27. There may be some sharp move in the afternoon.