Pre Market Report, July 9, 2019 | Stocks and Commodities

July 9, 2019
Time: 8.25 am

Pre Market Report:

1. On Friday, markets fell as minimum shareholding recommendation of 35% from 25%.
2. But Banks, NBFCs did well.
3. That is due to some budget measures were favorable to them and these companies are not affected by 35% shareholding.
4. Over the weekend, surcharge for income above Rs 2 crore were discussed widely.
5. Budget stated that it is only for individuals.
6. I thought FIIs are not affected.
7. Later I understood that many FIIs, in order to avoid Minimum Alternate Tax, operate as Association of Persons or through Trust.
8. These surcharges above Rs 2 crore seems to be applicable for these entities.
9. Their Long Term or Short Term Capital Gain tax effectively higher than 10% or 15%.
10. That triggered a huge sell off yesterday.
11. I was not aware of these developments.
12. That is why I said Nifty is likely to take support at 11750.
13. But within few minutes of market open, broke 11750.
14. Yesterday's fall was the biggest fall in 2019.
15. In fact this is the worst fall in last 5 years.
16. Bluest of blue chip stocks like H2B2 came under severe selling pressure.
17. Who can imagine more than 10% fall in Bajaj Twins in one day.
18. By the time you understand the rule of the game, market tells you that the game is over and you lost.
19. At the end of the day FIIs have sold for Rs 400 crores and DIIs bought for Rs 320 crores, effectively bringing the net institutional sell figure to only Rs 80 crore.
20. But Bank Nifty and Sensex fell 800 points.
21. May 23 low was broken and that triggered technical selling further.
22. In last one hour, markets recovered a bit as some morning shorts were covered.
23. FM has not clarified this surcharge on FPIs.
24. That increases uncertainty.
25. I thought Nifty will take support at 11600 and in just two trading session, Nifty fell from 12000 to 11500.
26. After such a big fall, logically markets should consolidate at lower levels, at least for few days.
27. As long as yesterday's low is not broken, we can expect some consolidation.
28. If yesterday's low is broken further selling is not ruled out.
29. Next support will be only at 11400.
30. US Fed Chairman testimony, TCS, Infosys, IndusInd Bank results, IIP and Inflation data are the key things to watch in the next three days.
31. TCS will declare results today evening, that is why it did not fall yesterday.
32. As the results come after market hours, there will be gap up or gap down, so short sellers will not be active in this stock.
33. Reliance tried to trade in Green but failed as the overall market was so bearish.
34. Most Asian markets are negative. Japan is the only market to trade marginally in Green.
35. SGX Nifty is slightly down.
36. We need to see whether these index heavy weights come under further selling.
37. I feel that markets will consolidate between 11500 and 11700 for next few days.