SELLING at higher levels? Post Market Report 13-Jun-24

Summary

In the post-market report sponsored by Delta Exchange, PR Sund discusses the Nifty's performance, noting its closing just below 23,400 with the future also slightly below this mark. He highlights the Nifty future's premium being wiped out and the resistance at 23,500, which may weaken with repeated attempts. Sund also points out the underperformance of the banking sector and his profitable short straddle strategy. He mentions the significant selling by foreign and domestic institutions, suggesting a cautious outlook despite the market's bullish trend. Sund anticipates market consolidation with potential impacts from upcoming tax policy changes, and notes the broader market's positive performance despite the index's less impressive showing.

Takeaways

• 📉 The Nifty closed just below 23,400, with the Nifty future also closing slightly below this mark.
• 💡 Nifty future premium has been completely wiped out, now trading at a discount to the spot price by one or two points.
• 🔄 For the fourth straight day, Nifty future attempted to move towards 23,500 but failed to close above 23,400, indicating strong resistance at this level.
• 💰 The speaker made a significant profit from a short straddle in the July series, with a 100 rupee profit on 3,000 quantities, amounting to around 3.5 lakh rupees.
• 🏦 Bank Nifty underperformed, despite Nifty reaching a closing all-time high, suggesting a divergence in the performance of banking stocks.
• 📉 FMCG stocks experienced selling, with no clear reason given, and FAs (Foreign Institutional Investors) were net sellers for more than 3,000 crores.
• 📊 Domestic institutions also sold for about 500 crores, leading to a net sell of more than 3,500 crores without a significant market impact.
• 🕒 Selling activity started in the morning instead of the usual post-2 p.m. pattern, suggesting a change in market dynamics.
• 🌐 The speaker anticipates market consolidation, with global cues indicating otherwise, and advises caution due to potential tax policy changes.
• 📈 The broader market performed well, with more money flowing into mutual funds, especially midcap and small cap funds, despite index-level underperformance.
• 🎉 The speaker mentions a personal event, which limited their research, but expresses hope that viewers enjoyed the video.

Q & A

What was the closing level of the Nifty and Nifty future mentioned in the report?

The Nifty closed just below 23,400 and the Nifty future also closed slightly below the same level.

What does the term 'Nifty future premium wiped out' imply?

It means that the premium, which is the additional cost over the spot price for Nifty future contracts, has been completely eliminated, and now Nifty future is trading at a discount to the spot price.

Why is the resistance level of 23,500 significant in the script?

The resistance level of 23,500 is significant because the Nifty future has repeatedly tried to move above this level for four straight days but has failed to close above it, indicating strong selling pressure at this point.

What is a 'short straddle' and why was it mentioned in the script?

A short straddle is an options strategy where the trader sells both a call and a put option with the same strike price and expiration date. It was mentioned because the speaker used this strategy in the July series and made a profit when the market moved as expected.

How much profit did the speaker make from the short straddle in the July series?

The speaker made a profit of more than 100 rupees per lot, with a total of 200 lots, resulting in a profit of around 3.5 lakh rupees.

What was the speaker's observation about the performance of bank Nifty compared to Nifty?

The speaker observed that bank Nifty underperformed compared to Nifty. While Nifty reached a closing all-time high, bank Nifty was much lower, even on an intraday basis.

What was the speaker's view on the market's performance in terms of broader indices?

The speaker mentioned that broader market indices, including midcap and small cap mutual funds, performed well, but at the index level, the performance was not very impressive.

What is the speaker's expectation for the market in the coming weeks?

The speaker expects a consolidation in the market, with a broader range of 23,000 on the downside and 24,000 on the upside, as most of the positives have already been factored into the prices.

What factors might influence the market's direction according to the speaker?

The speaker suggests that global cues and potential taxation issues from the BJP government, such as changes in FPA taxation or long-term and short-term capital gain tax, could influence the market's direction.

Why did the speaker mention the selling activity of foreign institutional investors (FIIs) and domestic institutions?

The speaker mentioned the selling activity to highlight a potential cautious outlook returning to the market, as both FIIs and domestic institutions were net sellers, indicating a significant amount of selling pressure.