Pre Market Report, July 8, 2019 | Stocks and Commodities

July 8, 2019
Time: 7 am

Pre Market Report:

1. US markets closed lower as the jobs data was very good and that reduces the rate cut hope.
2. Asian markets are following US markets.
3. South Korea Kospi down by more than 1%.
4. European and US futures are down.
5. Turkish Lira tumbled as Central Bank chief was replaced.
6. Iran said it will enrich more Uranium and that is lifting the Crude oil prices.
7. So in general Global cues are not good.
8. Coming back to our markets.
9. Everyone expected something in budget.
10. There was something for everyone in the budget: Disappointment.
11. But all other factors were ignored, Public shareholding increase to 35% is what market could not digest.
12. This new rule, if implemented, will bring new issues worth Rs 4 lakh crore.
13. The fresh flow is hardly Rs 10000 crore per month.
14. That means we need 4 to 5 years of all money channeling to new issues.
15. Then how the secondary market sentiment will be up?
16.  For middle class, there was no benefit but increase in petrol and diesel prices is a bad thing.
17. STT reduced for ITM option buyer, again that is not a good thing.
18. Let me explain this later.
19. So overall, this budget is not stock market friendly budget.
20. But if Global cues are good, if earnings improve here, then markets may go up.
21. Remember last time when SEBI increased the public shareholding from 10% to 25%, markets were actually up.
22. But this time, Nifty 50 stocks may not be affected, except one or two like TCS, WIPRO.
23. Most of the stocks with more than 65% promoter shareholding are from mid cap and small cap space.
24. So mid cap and small cap under performance may continue going forward.
25. Many good quality stocks like Sun TV hit 52 week low.
26. May 23 range of 11600-12100 will go on for few more weeks.
27. Budget has done something for NBFCs and Housing Finance Companies. This additional tax benefit for affordable housing is good for Housing Finance Companies.
28. Over the weekend there was some news about DHFL resolution and that is good for NBFCs in general and DHFL and IndiaBulls Housing in particular.
29. Since all the Banks also have housing finance portfolio, and measures announced to help NBFCs will bring the stress down on Banks, Banks did well on Friday.
30. So budget is positive for Banks, NBFC and Hosusing Finance Companies.
31. Now the focus will turn to Corporate results.
32. Tomorrow evening TCS will come out with results, on Friday Infosys and IndusInd Bank will declare results.
33. SGX Nifty is down by 30, 40 points.
34. Going by the VIX, the down trend is also limited and should be gradual.
35. Markets are likely to stabilise at lower levels.
36. Reliance looks very weak and that is the main drag for index.
37. As I said earlier, short straddle is the best strategy in this kind of markets.
38. Even when Nifty fell nearly 150 points on Friday, all straddles Nifty July 12000, August 12000, September 12000 and December 12000, are in profit.
39. I will turn bearish if Banking stocks start falling.
40. Nifty future may trade between 11850 and 11980.