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

August 9, 2019
Time: 8 am

Pre Market Report:

1. Yesterday morning I mentioned that yesterday could be the best day for short covering.
2. What usually people do, buy Rs 1, 2 Call options, arrange for news flow like "Govt considering removal of surcharge for FPIs" (See the timing of news, on Thursday around 2.30 pm) and then will cover their shorts.
3. They would have made a killing.
4. I expected this kind of activity and that is why I mentioned like that.
5. Option writers, especially Call writers would have lost heavily.
6. Nifty 11000CE shot up from Rs 0.30 to Rs 30.
7. Bank Nifty 28000CE from Rs 2 to Rs 90.
8. Anyway markets seems to have made double bottom around 10800.
9. If the Govt talks are converted into actions, then 10800 will be the low for near term.
10. One can consider selling Put options at 10800 and below.
11. Or one can try bull put spread.
12. Yesterday's rally has changed many things.
13. December 11000CE shot up about Rs 45 more than the loss of 11000PE.
14. Call option premiums have shot up.
15. This shows that the smart money believes that the rally will continue.
16. Today for the first one hour if markets are good, then on any dip, planning to cut the short positions and take long positions.
17. Nifty may head to 11400 to 11500 if all goes well.
18. If you are a high risk taker, you can sell 11000PE also as that strike has the highest open interest.
19. As I stated earlier, markets can not recover without Reliance contribution.
20. Just two days before, on Tuesday also Nifty shot up above 11000 but sold into immediately as Reliance did not recover.
21. Yesterday rally and Tuesday rally, the main difference is Reliance.
22. So this time markets may not be sold into.
23. In fact expecting some selling, many people will go short and they may fuel further rally.
24. Today FM meeting FPIs. These meetings show that at least Govt recognises that there are some problems.
25. So far even that indication was not available for bulls.
26. Today's market move is very important for many reasons.
27. One, Monday is a holiday, we will not be able to react to Global cues.
28. Next Thursday is a holiday again, so weekly options have only 2 days of trading after today.
29. So we can expect some sharp moves today.
30. I will not be surprised if Nifty closes somewhere near 200DMA.
31. But that may not come so easily, will come with some volatility.
32. So be careful if you are selling call options.
33. So now market is buy on dip rather than sell on rise.
34. Need to watch how Reliance moves, PSU Banks are still not moving.
35. Nifty future may trade between 11020 and 11160.