Pre Market Report 08-Aug-2024

Summary

The premarket report discusses the volatile US markets, influenced by disappointing jobs data that sparked recession fears. Global markets are jittery, awaiting the weekly jobless data and potential Fed rate cuts. Asian markets are down, with the Nifty index showing instability despite domestic institutions absorbing foreign selling pressure. The script predicts continued volatility, with the Nifty expected to consolidate between 24,000 and 25,000, highlighting the impact of the RBA policy and banking sector underperformance on market sentiment.

Takeaways

• 📉 The US markets experienced significant volatility, with a drastic fall from a 300 point plus to about 250 point minus, mainly due to the fear of recession triggered by the recent US jobs data.
• 📊 The weekly jobless data release is anticipated to cause further market jitters, as it may indicate additional economic weakness.
• 🗣️ There are rumors about the Federal Reserve possibly considering an emergency meeting to cut rates, but these are unsubstantiated and have not been confirmed.
• 🇯🇵 Japan has decided not to increase rates further, contributing to the stabilization of the Japanese market.
• 🌐 Asian markets are generally down, and the Nifty is indicated to open with a gap down of about 180 points.
• 📈 Despite foreign institutional investors (FII) selling heavily, domestic institutions are buying equally, preventing a significant market drop.
• 🔄 The Nifty future premium has expanded, and short sellers are covering their positions, indicating potential market stabilization.
• 💭 The reliability of the GIF Nifty indicator is questionable, with a history of being less than 50% accurate in volatile situations.
• 🏦 Banking stocks have underperformed significantly, with Bank Nifty falling more than the broader Nifty index.
• 📝 The Reserve Bank of Australia (RBA) policy is expected to be a non-event with no change in interest rates, but cautious commentary from the RBA Governor could affect market sentiment.
• 📊 The Nifty is expected to trade within a range of 24,000 on the downside and 25,000 on the upside, with a consolidation phase before potentially turning bullish if it crosses the recent high of about 25,000.

Q & A

What was the state of the US markets according to the script?

The US markets were very volatile, with a drastic fall from being 300 points up to around 250 points down, mainly due to the US jobs data that triggered recession fears.

What is the significance of the weekly jobless data in the US markets?

The weekly jobless data is significant as it can indicate further weakness in the economy, which may intensify recession fears and cause market instability.

What rumors were circulating about the Federal Reserve's actions?

There were rumors that the Federal Reserve may consider some kind of relief, possibly not waiting until the September meeting to cut rates, but these were unsubstantiated.

How did Japan's decision on interest rates affect their market stability?

Japan's decision not to increase the rate further contributed to the stabilization of the Japanese Market.

What was the trend observed in the Asian markets?

Most of the Asian markets were down, with the GIF Nifty indicating a nearly 180 point gap down.

How did the Nifty's performance in the last three trading sessions compare to the expectations?

The Nifty showed a pattern of significant gaps up and down, with a 300 point gap down on Monday, followed by a 600 point fall, and then a 200 point gap up on Tuesday with further fluctuations.

What is the role of domestic institutions in the current market scenario?

Domestic institutions are willing to absorb the selling pressure, buying equally to the amount sold by FII, which has prevented the market from falling significantly.

What is the significance of the Nifty future premium and how did it change?

The Nifty future premium expanded, indicating a shift in market sentiment, and it was expected to shrink with the 180 point gap down indicated by GIF Nifty.

How reliable is the GIF Nifty in predicting market movements?

The script suggests that the GIF Nifty is not very reliable, with its predictions being less than 50% accurate in such volatile situations.

What is the potential impact of the RBA policy on the market?

The RBA policy is expected to be a non-event with no change in interest rates, but the Governor's comments could affect market sentiment, especially if they are cautious.

What is the current situation with banking stocks and how does it compare to the overall market?

Banking stocks have underperformed significantly, with Bank Nifty falling about 5-6% compared to the overall Nifty's fall of less than 3%.

What is the expected range for Nifty's closing and why is it important?

The expected range for Nifty's closing is between 24,000 and 25,000. It is crucial because if Nifty closes below 24,000, it could signal a very dangerous market situation.

What does the script suggest about the market's future trend?

The script suggests a consolidation with a positive bias, with the market expected to turn bullish if Nifty crosses its recent high of about 25,000.