Pre Market Report, October 26, 2017 | Stocks and Commodities

October 26, 2017
Time: 8.25 am

Pre Market Report:

1. Yesterday's fantastic bull run in PSU Banks was not even imagined.
2. Many technical people were long in Banks like HDFC bank, Yes Bank, Kotak Bank, IndusInd Bank and short in PSU Banks and Axis and ICICI Bank.
3. Yesterday they all met with huge losses due to huge gap up in PSU Banks and that forced them to offload their privates sector folio also.
4. That is why all the private sector banks which were under firm bull grip had to face the collateral damage.
5. Earnings is playing out in US also. Yesterday US markets fell.
6. Despite that Asian markets are more or less flat.
7. SGX Nifty hit a low of 10212 yesterday night. It must be remembered yesterday SGX Nifty hit a high of 10400.
8. Now SGX Nifty is trading around 10270. As long as yesterday's low is not broken, nothing to worry.
9. Today we need to see how Bank Nifty is going to perform and it will be more interesting to see how those private sector banks that fell yesterday will perform today.
10. Yesterday it was hard time for option sellers. Many people would have lost huge amount.
11. Just a day before SBI 265 Call was trading at Rs 2 and yesterday it was Rs Rs 62, leading to a loss of Rs 1.8 lakhs in just one contract.
12. If you get profit it is Rs 6000, if you lose it can be Rs 1.8 lakhs.
13. That is what the risk the option selling carries.
14. Professional people will not sell Call or Put in stocks.
15. Option selling in stocks should be used only for hedging purposes.
16. Selling of options must be restricted to indices.
17. Today market may open slightly lower and consolidate until afternoon.
18. I am not expecting any big fall as most of the traders give more weightage to FII than DII.
19. We also need to see whether FIIs buy today or not.
20. Though FIIs were net sellers for the last three months, in between one or two days they bought for about Rs 500 crores.
21. But the following day, they continued the selling spree.
22. But yesterday two things are different, one FII buying was more than Rs 3500 crores, not seen in the last 7 months, second, it came with huge volume.
23. Yesterday FII gross buy was more than Rs 12000 crores, net buying was Rs 3500 crores and there was gross selling of Rs 8500 crores by FIIs.
24. SGX Nifty is down by about 20 points mainly because of Global cues.
25. But we did not follow global cues for the last few weeks, then why should we follow today.
26. Infosys is up by more than 3% yesterday in US whereas it was only 1% higher yesterday here.
27. So Infosys and other stocks may support the market today.
28. Collateral selling will not be there today, so other stocks may recover today.
29. We can expect some sharp move towards the end of the day.
30. Nifty may face resistance around 10320.
31. We can expect expiry between 10280 and 10320. But we do not know how much of longs or shorts are in the system due to viloent move yesterday.