Pre Market Report, July 11, 2019 | Stocks and Commodities

July 11, 2019
Time: 8.10 am

Pre Market Report:

1. Our markets closed at the lowest closing of the series yesterday.
2. Nifty closed below 11500.
3. Both Nifty future and Bank Nifty future trading at discount to their respective spot prices.
4. Everyone was waiting for Finance Minister's clarification of surcharge on Tax for FPIs.
5. But the clarification came from Income Tax Dept, saying that the surcharge is applicable for FPIs.
6. Income Tax advised FPIs to change to corporate structure if they want to avoid surcharge.
7. That has dented the sentiment, Nifty closed below 11500.
8. US Fed Chairman testimony added jitters.
9. But in the late evening US Fed Chairman said he is open to cut rates as Economy is facing some uncertainty.
10. That lifted the sentiment in Global markets.
11. US markets opened higher and closed higher.
12. Asian markets are following US markets and most of them are trading in Green.
13. Now SGX Nifty is also trading about 40, 45 points higher.
14. But Crude oil is trading higher and that is really not good.
15. Nifty has fallen about 500 points in 3 to 4 trading sessions.
16. In my opinion, it is oversold.
17. In all these days, net Institutional sell figure were not bad. DIIs have bought more than what FIIs have sold.
18. So Nifty fell 500 points in such a short span, without any meaningful Institutional selling.
19. So there may be some short covering at some point.
20. But that needs a trigger, the trigger did not come from TCS results.
21. FPI surcharge added fuel to the fire yesterday, so markets fell instead of short covering.
22. This Global cues may act as a trigger, or tomorrow's IndusInd Bank results may be a trigger.
23. Or IIP, Inflation data and Infosys results tomorrow evening may be a trigger.
24. If there is no up move today or tomorrow or Monday, then outr markets will go for long term bearishness.
25. Even if there is any short covering, Nifty may go to 11600 to 11700 only.
26. Going beyond 11700 is going to be very difficult at this point of time.
27. Since there were some good measures for NBFCs, Banks and Housing Finance Companies in budget, these stocks will have to lead the recovery.
28. One can short Nifty and long Bank Nifty as Bank Nifty is likely to out perform in the near term.
29. Markets are highly volatile, Bajaj Finance fell 10% one day, up 5% next day, down 5% following day.
30. That is a 2 lakh crore market cap company, swinging 20% in 3 days. That is a swing of Rs 40000 crores in 3 days.
31. That is just one company. Think about Titan, TCS, etc.
32. Huge OI added at 11600CE for today's expiry.
33. Max Pain is at 11550.
34. So Nifty is expected to settle below 11600, if there is any short covering towards the end of the day, then the story will be different.
35. HDFC Bank ADR is up by 2% and ICICI Bank ADR is up by 0.5%.
36. But HDFC Bank ADR is not a true reflection of HDFC Bank as ADR trades at huge premium, that premium tend to fluctuate depending on US sentiment.
37. Bank Nifty 30700CE added huge OI and Max Pain is at 30600. 
38. There was hardly any addition in puts.
39. Bank Nifty 30500PE and 30000PE have good OI.
40. So Bank Nifty may out perform Nifty and Nifty future may trade between 11480 and 11600.
41. Bank Nifty may trade between 30400 and 30700.
42. There may be some sharp move towards the end of the day, particularly HDFC Bank.