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

 September 25, 2020

Time: 8 am

Pre Market Report:

1. September series was one of the high volatile series.
2. Nifty fell more than 700 points in last 4 trading sessions.
3. FIIs have sold for Rs 8000 crores in last 3 trading sessions.
4. Bluest of blue chip stocks corrected more than 10%.
5. Stocks like SBI, IndusInd Bank, Axis Bank, Bajaj Finance corrected more than 20% from their September high.
6. Last week in my 'Dalal Street Week Ahead' I mentioned, whenever first 3 weeks are high volatile in a series, fourth week will see a big move.
7. I expected that big move on the higher side.
8. But huge sell off in Nasdaq triggered down side move.
9. Dollar index crossing 94 aggravated selling by FIIs due to the fear of currency depreciation.
10. Another important observation, if markets are in huge downward trending, expiry will happen at the lowest point. That is what happened yesterday.
11. The next day, if markets gap up, then expiry day low will be the low for at least short term.
12. Democratic party proposing 2.4 trillion stimulus.
13. After this news, US futures are higher.
14. Yesterday US markets were also highly volatile but closed in Green.
15. SGX Nifty is up by about 75 points.
16. But Nifty has to cross 11000 so that we can expect the recovery to sustain.
17. Over valuation, talk of second lock down due to corona, no progress in US stimulus, political tension due to Trump remark, all contributed to the fall.
18. But no lock down as announced officially in any European country, Stimulus will come sooner than later in US, Trump comment was negated by his own party people, valuations look reasonable after huge sell off.
19. So markets have reasons to stabilise, at least, if not resuming the up trend.
20. So new series starts with slight Optimism.
21. But still it will be a sell on rally market as long as FIIs keep selling for more than Rs 1000 crore a day.
22. For investors, this is a good opportunity to enter.
23. Since markets fell in last 30 minutes yesterday, Nifty tested 200DMA.
24. One can look at Private Sector Banks and some blue chip NBFCs.
25. Yesterday it was a capitulation day, even IT stocks fell while Currency depreciated.
26. If markets open flat and starts moving higher, then it will be sustainable.
27. But if there is a huge gap up, that can be sold into.
28. First one hour trade is important. And if first one hours high is taken out after 10.15, then we can believe that the recovery will be sustainable.
29. Another big problem, while FIIs selling in huge quantities, DIIs are not buying.
30. Yesterday DII buying was just one tenth of FII selling in Cash market.
31. But this series opens with very light positions.
32. That is a good sign. Some sharp rallies came whenever the month began with very light positions.
33. Markets may go up but volatility will be there as US elections is approaching.
34. Nifty future should take support at 10840, yesterday's closing price.
35. Resistance will be at 11020. There will be selling if markets move higher quickly.