Pre Market Report, August 27, 2019 | Stocks and Commodities

August 27, 2019
Time: 8 am

Pre Market Report:

1. Yesterday's volatility in our market, not seen in more than 10 years.
2. Even during 2015 when China devalued its currency, in 2016 double whammy of demonetisation cum Trump winning, in 2017 Brexit, in 2018 February Dow crash, our markets have shown only gap down then recovery.
3. But yesterday Bank Nifty Pre open 700 points up, at open 600 points up, then fell 800 points then shot up 1200 points.
4. That is a total swing of about 10% of the total market cap.
5. Nifty gap up 150 points, fell 250 points and then shot up 350 points.
6. Trendfollowing Traders were killed both sides.
7. HDFC has been very volatile in the last few weeks.
8. Surprisingly Reliance fell.
9. If not Nifty would have moved even higher.
10. But at the end of the day, FIIs have sold for more than Rs 700 crores.
11. So there may not be any significant rally going forward.
12. But the news like "RBI transfering its surplus to Govt, Rs 1.76 lakh crore" will aid further short covering.
13. Nifty is likely to consolidate between 11000 and 11200.
14. Due to such a big rise, Call option premiums have shot up.
15. Even 11200CE is trading around Rs 25.
16. Today there may be some gap up or there will be some sharp upmove due to RBI news.
17. Then at some point there will be some selling as FIIs continue to sell.
18. Overall market may be volatile but close to close basis there may not be any significant move on either side.
19. Usually after such a big rise, markets will consolidate at least for 2 to 3 days.
20. Day before yesterday I bought 27200CE and sold 2X27500CE. The moment 27500 is touched I sold 1X27500PE. Then sensing the stong up move, I went long in futures at 27650.
21. Rule is to convert it into straddle when the strike touched. Then going long happens at Strike plus Premium. Earlier I sold 27500CE at about Rs 150, so went long at 27650.
22. End of the day squared up all positions as volatility may continue.
23. We do not know what Trump will do overnight.
24. Made some error trades and worried about markets moving so violently.
25. Accidentally squared off Nifty long futures at 11000.
26. Earlier I stated Nifty is likely to trade between 10800 and 11200 with huge volatility.
27. A technical which I follow has shown long around 10900.
28. My technicals is Super Trend, those who have been following me should know.
29. So on any dip, I am olanning to add more long positions.
30. SGX Nifty is trading around 11100, 50 points higher than yesterday's close.
31. Yesterday at close I took some long positions, expecting this up move.
32. Thanks to RBI which is transferring Rs 1.76 lakh crore that will help Govt to announce some kind of fiscal stimulus.
33. But the trades are not going to be easy, expect the volatility to continue.
34. Since it is the expiry week, there will be Gamma effect.
35. You need Iron Nerves to trade in this market, according to my friend Mr D Muthu Krishnan.
36. So be ready for another day of roller coaster ride.
37. Nifty future may trade between 11000 ( Round figure, psychological support) and 11180 (somewhere near 200DMA).