Pre Market Report, February 25, 2020 | Stocks and Commodities

February 25, 2020
Time: 8.15 am

Pre Market Report:

1. Over the weekend, Corona Virus affected cases reported in Italy, Iran and South Korea.
2. That triggered panic selling across the world.
3. Nifty fell nearly 250 points.
4. All Nifty 50 stocks ended in Red after more than a decade, if I am not wrong.
5. India VIX shot up 24%.
6. Put options shot up but Call options did not fall propertionally.
7. Bank Nifty 31000CE, which is 600 points away, just 3 more days for expiry, closed around Rs 65. This is huge premium.
8. When our markets opened yesterday, Dow futures were down by 300 points.
9. That started falling more and more and at one point it was down 850 points.
10. So our markets came under severe selling pressure after trading around 11900 for most part of the day.
11. When Dow opened, it opened around 1000 point lower.
12. At the lowest point, it was down by 1200 points and then in the last 15 minutes, recovered about 200 points.
13. S&P 500 fell more than 3% only 3 times in every two years since 1950.
14. Whenever it fell more than 3%, next day, on an average, it shot up 1.2%.
15. Right now Dow futures is up by about 3%.
16. Moreover, no additional bad news came from any country.
17. Yesterday night SGX Nifty hit a low of 11730.
18. But now it is trading around 11895.
19. For most part of the day, Nifty future was trading around 11900 and Bank Nifty future was trading around 30600.
20. Now markets may open around that level.
21. FIIs bought for Rs 1500 crores on last Thursday and sold Rs 1100 crore yesterday.
22. So FII selling is actually not that bad.
23. Normally this kind of fall, they would have sold Rs 4000 to 5000 crores.
24. Yesterday panic started from South Korea, now trading in Green.
25. Right now, South Korea, Hong Kong, Singapore are trading in Green.
26. Some banking stocks showed resilience like Kotak Bank (Second best performer, after Infy), IndusInd Bank, Yes Bank.
27. SBI was very firm in the morning, but came under selling pressure later.
28. Banking stocks may out perform, yesterday also they out performed.
29. SBI Card IPO is near, so there may not be any more selling in SBI.
30. I expect SBI Card issue to be a huge success and SBI will trade positive in March series also.
31. I am long in SBI one lot at Rs 298.
32. Markets can be highly volatile as we are very close to expiry.
33. There is huge shorting in F&O by FIIS. There is little premium in next month series.
34. So there is no incentive to rollover the shorts.
35. Therefore, they may simply square up the shorts at some point of time.
36. That may trigger a short covering rally.
37. That is assuming there is no further bad news from Corona Virus.
38. Bank Nifty future may find resistance at 30600.
39. Nifty future may find resistance at 11920.
40. Both indices will find support at yesterday's low.