Pre Market Report, May 7, 2019 | Stocks and Commodities

May 7, 2019
Time: 8 am

Pre Market Report:

1. Dow futures indicated 500 point down when we closed here.
2. It opened 500 points down but recovered to close just 66 points lower.
3. But after the close, US announced that it will go ahead with Tariff hike against China by this Friday.
4. Dow futures fell again, now trading 150 points lower.
5. This may be viewed as pressure tactic to bring China to negotiation table.
6. But Global markets reacted aggressively.
7. Yesterday both Japan and South Korea markets were closed.
8. South Korea had to react to North Korea missile launch also.
9. So both markets are down.
10. But other markets are recovering, following US
11. Friday Bank Nifty went up, all call premiums shot up, but put premiums did not fall.
12. Yesterday Bank Nifty fell, all put premiums shot up but call premiums did not fall.
13. Even in Nifty, Nifty fell more than 100 points but Nifty 12500CE did not go down even by Rs 1.
14. ICICI Bank came with decent numbers, people say Net Profit is down, but traders mostly focus on NPA rather than Profit.
15. Many brokerage houses increased the target price after the results.
16. But ICICI Bank ADR is down by more than 1%. We may not focus ADR prices point by point as Currency fluctuations will play a role in ADR prices.
17. Yesterday markets were brought down by index heavy weights like Reliance, HDFC Bank, etc.
18. India VIX shot up by another 10% yesterday.
19. India VIX is likely to touch 30 ahead of election results.
20. After shooting up from 10700 to 11700 in March series, Nifty has been consolidating for the past 6 weeks.
21. Vedanta is set to declare results today.
22. Titan will declare results tomorrow and Asian Paints and HCL Tech on Thursday.
23. Next major Bank results is on Friday by SBI.
24. So Bank Nifty has no event risk until this weekly expiry on May 9.
25. I have sold 30000CE to 30700CE on call side and 29500PE on put side.
26. I have also sold ICICI Bank 440CE and 450CE.
27. Done some strategies in ICICI Bank and SBI which I posted in Twitter.
28. HDFC Bank is splitting the shares, this may increase the liquidity and hence may be viewed as a positive news.
29. SGX Nifty is trading around 11690, about 40 points higher.
30. If markets hold on to the gains and if there is no more news flow from US, then there may be some short covering in the later part of the day.
31. After all, we have a major event here in India, election results, we should not be over reacting to Global cues now.
32. The way markets are reacting, it seems that the exit poll results so far is not giving any clarity.
33. US seems to have set this Friday for trade deal announcement as per source based information, when that did not happen, US announced that it will hike tariff.
34. If this is a pressure tactic and if they come together and announce a deal by this Friday then every thing will change upside down.
35. So shorting at this point is not a good idea.
36. One can play with Put Ratio Spreads.
37. ITC is looking bullish. IT stocks may take support around these levels.
38. Need to keep a watch on Reliance, it started correcting after hitting all time high.
39. But Auto stocks are holding.
40. Nifty future may trade between 11620 and 11740.