Pre Market Report, March 05, 2020 | Stocks and Commodities

March 05, 2020
Time: 8.15 am

1. Dow closed more than 1000 points higher.
2. Volatility started last Monday.
3. Since then, out of 8 trading sessions, I think Dow moved more than 1000 point up or down on 6 days.
4. Asian markets are positive.
5. But India is not following Global cues now.
6. The Fear of Corona Virus in India is driving India markets crazy.
7. Yesterday it was so volatile, Bank Nifty fell more than 1000 points and recovered more than 600 points from low.
8. But FII sell figure has come down, below Rs 1000 crore, for first time in last two weeks.
9. DIIs also have bought for less than Rs 1000 crore.
10. But the markets were most volatile.
11. Today is weekly expiry, so volatility is likely to continue.
12. Despite strong Global cues, SGX Nifty has been trading in Red.
13. Yesterday Nifty opened around 11300, weekly Nifty 11000PE was trading around Rs 20, I thought it is safe to sell, just one day to expiry, 300 point buffer, 2% return appx.
14. But it shot up to Rs 30 within minutes, sold again, the it went all the way to Rs 63, when markets crashed, started selling 11400CE.
15. So now I have 11000PE and 11400CE in weekly expiry.
16. Corona Virus fear seems to be receeding, particularly in China.
17. But it is increasing in India.
18. So it is time to close Call options as markets may recover sooner than later.
19. When Nifty broke 11100, I closed some of my Call options.
20. SBI Card IPO, QIB portion over subscribed by 57 times.
21. It is likely to over subscribe by more than 100 times as HNIs and Retail will apply only on last day.
22. That may help SBI to stabilise.
23. Bank Nifty hugely under performed yesterday.
24. If there is any short covering, Bank Nifty will out perform.
25. HDFC Bank is the main dragger yesterday.
26. Good Global cues and bad Local cues, markets can go both sides and that is what happened yesterday.
27. As I said earlier, Nifty will be making violent moves between 11000 and 11500.
28. I will turn bearish below 11000 and bullish above 11500.
29. Until then keep selling Far OTM options.
30. I shorted Bank Nifty future at 19500 and sold 29500PE (Covered Put). Now fearing the reversal, sold 26000PE at Rs 120.
31. But 26000PE shot up to Rs 250, then came down to Rs 120.
32. Even March 26 expiry Nifty 10000PE traded at Rs 50.
33. With so much determination by DIIs and improving Global cues, I do not think these far OTM option buyers will make money, if they hold the positions until maturity.
34. Option buying is basically for momentum players, they get in and get out before momentum dies.
35. Only hedgers will hold the options until expiry.
36. US markets came out of correction territory. By US definition, more than 10% fall from high is called Correction and more than 20% fall from high is called Bear market.
37. In last 3 days, Dow was up more than 1000 points on two days.
38. So it is time to be cautious on the higher side.
39. If markets are higher, expect some TV channels to give some bad news between 2 pm and 3 pm. 😛😛😛
40. Be cautious in the last one hour, keep your volumes low.