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Pre - Market Report (4th March 2020)

Pre Market Report:

  1. US markets fell Yesterday after rising more than 5% the day before.
  2. Dow fell about 800 points.
  3. Fed cut rates by 50 basis point in a surprising move, 2 weeks ahead of Fed meeting.
  4. This is the first out of turn rate cut by Fed after 2008 financial crisis.
  5. Other Govts are also acting & cutting interest rates to ensure Financial Growth & Liquidity in the System.
  6. Yesterday Australia and Malaysia cut rates.
  7. South Korea announced about 10 billion extra budget measures.
  8. US is planning fiscal measures also in addition to monetary measures.
  9. Now pressure mounts on RBI to cut rates.
  10. If RBI cuts rates, there will be powerful short covering.
  11. SGX Nifty is down by 60 points.
  12. Asian markets are mixed.
  13. Weekly options will add to volatility.
  14. Yesterday SGX Nifty hit 11220, then shot up to 11440 just after Fed rate cut, only to fall back to 11220. SGX Nifty swung more than 500 points.
  15. Markets may be highly volatile but may trade between 11000 and 11500.
  16. Option premiums are so high due to huge volatility & this is the best time to sell Options for Weekly Expiry.
  17. Bank Nifty 26000PE traded at Rs 160 yesterday.
  18. Gold and Crude are higher after US rate cut.
  19. If the markets do not stabilise, we can expect some action from Japan, UK and Europe.
  20. On every bounce I have been selling Call options.
  21. I sold 11600CE , 11700 CE in weekly Options.
  22. Bank Nifty weekly sold 30000, 30200, 30300, 30500CE.
  23. Remember rate cuts do not solve the problem of Corona Virus & this is a Temporary phenomena to boost the Sentiment of Markets.
  24. I will cut all Call options, if there are no more bad news from Corona front.
  25. Option Buying may play out to be very risky as the Premiums are quite high in both the Directions. Premiums will fall Drastically if VIX stabilises & also only 2 days left for Expiry so the time is less to cover up.
  26. Trend is Strong and its towards the Down Side. Still it is not a right time to go long on Indices by thinking that all the Negatives have been Priced in.
  27. After such huge Crash , we cannot witness a Vertical rally Immediately. There is a Process. First the Market Consolidates ,sets a base , makes a bottom and then starts to rally which takes time.
  28. Until then Whatever we are witnessing is just a Bounce it may be due to some short covering but buying hasn't started yet.
  29. Interesting data I have observed is Nifty Futures is Trading at Discount for this whole Expiry. This shows excessive Bearishness which is Prevailing in current Markets.
  30. 11400 is a short term resistance and 11100 is a short term support on Nifty.
  31. In such high Volatile Markets the best Strategy to trade is to reduce your Volumes and increase your Stoploss. The Problem in these Volatile Markets is the Movement is so severe that Stoploss gets Triggered most of the time & Trading without Stoploss is Equivalent to Driving a Vehicle without Brakes.


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