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

 September 1, 2020

Time: 8 am

Pre Market Report:

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2. US markets ended mixed once again.
3. But this is the best August for US markets since 1986.
4. But the story is totally different for us.
5. We have almost wiped off entire gain made in August is just one trading session.
6. Nifty fell 450 points and Bank Nifty 1900 points from intraday high to low.
7. That is a major correction after March pandemic correction.
8. Everything that can go wrong for option writers have gone wrong.
9. First it was huge gap up, then crash. Two way movement, I sold some options for Rs 100 and it has gone to Rs 800.
10. Second, India VIX spiked 25% and it was up by 50% from intraday low.
11. Put options shot up but but Call options did not come down proportionally.
12. For example, Bank Nifty 1500 points below 24000PE shot up by 400 points but 1500 points higher, 26000CE came down only by Rs 50.
13. Bank Nifty 26000CE and above weekly options have gone up despite Bank Nifty falling about 800 points.
14. First, it started with normal correction as some Asian markets were correcting.
15. Then the news came that there is some clash at India China border.
16. That triggered a panic, markets came under huge selling pressure.
17. Then cam the news that SEBI did not extend the new margin pledging rule, that aggravated selling.
18. Some people seems to know that AGR verdict will come today.
19. It could be a well calculated guess also, as the judge is retiring tomorrow.
20. Today AGR verdict comes at 11.30 am.
21. That can go against Reliance, so Reliance came under huge selling pressure. It was trading higher even when markets fell drastically. Only in the afternoon, it started falling.
22. GDP data came at -24% Vs -19% expected.
23. Again that is a lag indicator.
24. So it may be a non event for markets.
25. We can expect markets to stabilise.
26. Though markets fell so much, Open Interest has come down in many key stocks.
27. That shows that this is more of a profit booking or long unwinding than shorting.
28. We need to worry only when Open Interest increase.
29. We had a similar sell off last month, when Nifty fell 300 points intraday.
30. But it recovered 100 points on the same day.
31. It did fell without any reason.
32. But this time, despite Nifty falling 450 points from intraday high, it has not recovered.
33. A recovery attempt was sold into even in the last 30 minutes.
34. Nifty future closes very close to the lowest point.
35. This time, it fell due to some reasons like Indo-China tension, SEBI rules, etc.
36. But right now SGX Nifty indicating a gap up of about 80 points.
37. AGR Case and Loan Moratorium Interest case comes up in Supreme Court today.
38. Both will affect Banking stocks.
39. So Bank Nifty is likely to be more volatile.
40. RBI seems to be taking some steps to limit the yield in long term bonds.
41. That is good for Banks.
42. So expect some volatility in both Reliance and Banking stocks.
43. PSU Bank index and Pharma Index were the worst performers.
44. Auto stocks will be in focus today as monthly Auto sales data will be coming today.
45. Today local cues will dominate the markets.
46. Nifty future may trade between 11320 and 11520.