Pre Market Report, Feb 1, 2020 | Stocks and Commodities

Feb 1, 2020
Time: 8 am

Pre Market Report:

1. Yesterday our markets were very volatile.
2. Between 3 pm and 3.15 pm, Nifty fell 70 points.
3. Reliance keep falling.
4. Yesterday Kotak Bank was up 3.5%, IndusInd Bank and SBI were up 2.5%.
5. Despite that Nifty has fallen.
6. FIIs have sold for Rs 4179 crore.
7. That shows they are worried about Corona Virus over the weekend.
8. As expected US markets also came under severe selling pressure.
9. Dow fell more than 600 points.
10. So far US markets were resilient to Corona Virus.
11. Now that is also selling off.
12. Hong Kong has fallen 7% so far this week, yesterday night Hong Kong futures fell another 1%.
13. So total 8% fall in Hong Kong, where mny Chinese companies are listed.
14. So logically China can gap down 8% or more on Monday.
15. Hong Kong fell 3%, 3%, 1%, 1% on four days is much better than a market falling 8% in one day.
16. That is because, huge gap down, there will be margin calls, that will make things worse.
17. But today Budget will be in focus.
18. So any good news regarding DDT, LTCG, Personal Income tax cut, there will be short covering.
19. But it will be volatile. FIIs may not be active on Saturday.
20. The fear will peak out on Monday and then markets may consolidate after that.
21. Monthly Auto sales data will also be in focus today.
22. Infrastructure output growth data was good yesterday.
23. As I said earlier, I am expecting a good budget.
24. But I will sell on rally as the upside will be limited.
25. I did Call ratio spread yesterday.
26. Bought Nifty 12000CE and sold 2X12200CE in weekly options.
27. Bought BN 31000CE and sold 2X31600CE in weekly options.
28. As long as markets are neutral to mild negative, I will make some profits, provided VIX falls.
29. My gut feeling is that VIX will not fall even after budget.
30. The reason is that VIX is higher due to Corona Virus.
31. So we can expect VIX to fall only on Monday.
32. FIIs long positions stand at 15%, lowest in last many years.
33. So short covering possibility is very high, in case budget can give some upside shock.
34. Some out of box thinking is required.
35. SGX Nifty hit a low of 11887.
36. There is no point in predicting the support and resistance today ahead of such a big event.
37. But markets can be highly volatile.
38. Before the Parliamentary elections, Nifty was around 11700.
39. So that should act as a good support, in worst case scenario.
40. So I bought 12000PE and sold 2X11700PE in monthly options, expecting a good support at 11700.