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.

Outlines

00:00

📉 US Market Volatility and Economic Recession Fears

The first paragraph discusses the highly volatile US markets, which experienced a significant drop due to disappointing economic data that triggered recession fears. The speaker mentions rumors of the Federal Reserve possibly taking emergency measures to cut rates, but these remain unsubstantiated. The Japanese market's stabilization is attributed to the decision not to increase rates, contrasting with the US market's instability. Asian markets are generally down, and the speaker notes the difficulty for other markets to stabilize if the US market does not. The paragraph also touches on the Nifty's performance in the last three trading sessions, highlighting the gap up and down movements and the potential for market stabilization due to short sellers covering their positions.

05:01

🏦 Domestic Institutions' Support Amidst Banking Sector Challenges

This paragraph focuses on the role of domestic institutions in absorbing selling pressure, which has prevented a more significant market fall. Despite foreign institutional investors selling 20,000 CR, domestic institutions have matched this with equal buying, demonstrating a strong support for the market. The speaker anticipates market volatility due to global cues and local issues, such as the RBA policy announcement. The banking sector is particularly underperforming, with Bank Nifty falling significantly more than the overall Nifty index. The speaker speculates that cautious comments from the RBA Governor could affect market sentiment and banking stocks, but also suggests the possibility of short covering leading to a rise in Bank Nifty. The paragraph concludes with a revised range for Nifty's closing and emphasizes the importance of the 24,000 level for market stability.

10:03

🚀 Hopes for Market Stabilization Amidst Weekly Expiry Challenges

The final paragraph reflects on the difficulties faced by traders due to extreme market volatility, characterized by large gaps up and down. The speaker expresses a desire for the market to stabilize after a tumultuous week and highlights the impact of such volatility on traders. The paragraph also suggests that the market's direction post the weekly expiry could be influenced by the outcome of the RBA policy and the potential for a positive bias if Nifty manages to trade above 24,000. The speaker provides a view for the next few weeks, indicating that if Nifty crosses the recent high of 25,000, it could signal the end of bearish sentiment and the onset of a bullish market phase.

Keywords

💡Volatility

Volatility in financial markets refers to the degree of variation of prices over time, often indicating the unpredictability and rapid changes in market conditions. In the video, the speaker discusses the high volatility of the US markets, which is a central theme as it impacts investor behavior and market expectations. For example, the script mentions a 'drastic fall' from a 300 point plus to a 250 point minus, illustrating the dramatic shifts in market sentiment.

💡Stabilization

Stabilization in the context of the video refers to a period of reduced fluctuation and increased predictability in market prices. The speaker initially expected market stabilization due to signs from around the world, but was disappointed by the US market's performance. The concept is used to discuss the potential for markets to regain a more consistent and less erratic state, as seen in the mention of 'some signs of stabilization all over the world'.

💡Recession Fear

Recession fear is the apprehension in the market that economic activity is slowing down and may lead to a recession, which is a period of negative economic growth. The video script connects the US jobs data to the triggering of recession fear, which is a significant factor in market decline. The mention of 'reccession fear' is directly linked to the market's reaction to economic indicators and the subsequent impact on investor confidence.

💡Jobless Data

Jobless data refers to statistics related to unemployment, which is a key economic indicator. In the script, the speaker anticipates the release of weekly jobless data in the US, which is expected to influence market behavior significantly. The term is used to highlight the importance of unemployment figures in gauging economic health and their potential to cause market jitters.

💡FED

The Federal Reserve, or FED, is the central banking system of the United States, responsible for monetary policy. The script mentions rumors about the FED considering relief measures, such as cutting rates, which indicates the potential for central bank intervention to mitigate economic downturns. The FED's actions are crucial as they can significantly affect market conditions and investor sentiment.

💡Japanese Market

The Japanese Market is referenced in the context of its decision not to increase rates further, which contributed to its stabilization. The video discusses how different markets react to economic policies and global events, using the Japanese Market as an example of a market that has managed to stabilize amidst global uncertainty.

💡Nifty

Nifty is a stock market index representing a basket of 50 Indian companies listed on the National Stock Exchange. The script frequently refers to the Nifty index to discuss market movements in India, such as the '300 Point higher' movement and the '180 Point gap down' indicated by GIF Nifty. The term is central to the discussion of the Indian market's performance and outlook.

💡Futures Premium

Futures premium is the additional cost or price above the current market value of the underlying asset that a futures contract is trading for. In the video, the speaker mentions the Nifty future premium expanding, which suggests a higher demand for future contracts compared to the current market price. This is indicative of market sentiment and expectations about future price movements.

💡Gap Up/Gap Down

A gap up or gap down refers to a significant price jump or drop at the opening of the trading session compared to the previous session's close. The script describes a series of gap ups and gap downs, which contribute to market volatility and uncertainty. These terms are used to illustrate the unpredictable nature of market openings and their impact on trading strategies.

💡Domestic Institutions

Domestic institutions in the context of the video are local financial entities, such as banks, mutual funds, and insurance companies, that participate in the stock market. The script highlights how these institutions have been buying equally to what foreign institutional investors have sold, thus supporting the market and preventing a significant downturn despite large sales volumes.

💡RBA Policy

RBA Policy refers to the monetary policy decisions made by the Reserve Bank of Australia. The video anticipates a non-event in terms of interest rate changes but notes the potential impact of the RBA Governor's commentary on market sentiment. The term is used to discuss the influence of central bank communications on market expectations and stability.

💡Bank Nifty

Bank Nifty is a stock market index representing the banking sector of the Indian stock market. The script mentions the underperformance of banking stocks and a significant drop in Bank Nifty, which contrasts with the overall market performance. This term is used to highlight sector-specific challenges and their influence on market dynamics.

Highlights

The US markets experienced significant volatility with a drastic fall from a 300 point plus to around 250 point minus, indicating market instability.

US jobs data from the previous Friday triggered recession fears, causing market decline.

Markets are anticipating the release of weekly jobless data, adding to the jitters and potential economic recession concerns.

Rumors suggest the FED may consider an emergency meeting and rate cuts, though no official statement has been made.

Japan's decision not to increase rates further has led to stabilization in the Japanese market.

Asian markets are generally down, with GIF Nifty indicating a nearly 180 point gap down.

The last three trading sessions show significant market movements, with a 300 point gap down, followed by a 600 point fall and subsequent fluctuations.

Short sellers started covering positions as market participants believe the market will stabilize.

Nifty future premium expanded, indicating a potential market stabilization.

GIF Nifty's reliability in predicting market movements is questioned, with a historical accuracy of less than 50%.

Despite foreign institutional selling, domestic institutions are willing to absorb the sell-off, preventing a significant market fall.

The market is expected to be volatile today due to global cues and local issues, including the RBA policy.

Banking stocks have underperformed significantly, with Bank Nifty falling more than the overall Nifty.

There is speculation that the RBA Governor may sound cautious due to external developments, affecting market sentiment.

Short covering in Bank Nifty is a possibility if the RBA Governor's statement is dovish.

Nifty's technical resistance is at 24350, and if it closes above this level, it could signal the end of bearish sentiment.

The market is expected to consolidate between 24000 on the downside and 25000 on the upside, with a positive bias.

The recent high of 25000 needs to be crossed for the market to turn bullish, indicating a potential range-bound market for the next few weeks.

The difficulty of trading during the weekly expiry due to high volatility, with significant gap-ups and gap-downs.

The hope for market stabilization to alleviate the impact of volatility on traders.

Transcripts

F this is PR Su welcome to premarket

report sponsored by delta.

exchange look at the US markets was very

very volatile yesterday evening only I

gave the title for my video are the

market

stabilizing because there were signs of

stabilization all over the world but

yesterday US market was very very

disappointing the first half of the

session uh D was around 300 point plus

from 300 point plus it came down to uh

roughly about 250 Point minus so it was

a drastic fall uh from the afternoon

Market started falling

continuously why uh mainly because last

Friday the US jobs data came so that

only triggered the recession fear and

that is how the markets fell and now

today is Thursday and today evening in

us uh the weekly jobless data will come

so probably markets are very very

jittery about it so if if that also

indicates a further weakness in the

economy you know uh this economic

recession fear will come meanwhile there

were some reports you know the FED may

consider you know um some kind of a

relief maybe you know they may not wait

until September meeting they may call

for an emergency meeting they may cut

the rates but they all seems to be rumor

so there was no substance

but at least Japan has decided they will

not increase the rate further so that is

the reason why Japanese Market

stabilized but us markets do not seems

to

stabilize uh but if us markets are not

stabilizing it'll be difficult for other

markets to stabilize so that is what you

know happening now I think most of the

Asian markets are down and the GIF Nifty

uh indicating about 180 Point gum

uh however yesterday uh if you look at

the last three trading

sessions Monday there was a 300 point

gap down and then fell for the 600 Point

minus

closing Tuesday 200 Point Gap up then me

up another 100 point then crashing all

the way 400 point then Clos

flat and yesterday what happened 200

Point Gap up and then continued the

momentum and close another 100 Point

higher so it is a 300 Point

higher now it is

indicating uh a nearly 180 point gap

down yesterday for the first time Gap up

sustained and that is why we thought you

know Market will stabilize and that is

why uh some section of the participants

uh short sellers started covering the

shs so that is why yesterday the Nifty

future premium expanded

actually right Nifty future uh premium

was almost uh 70 75

points now with this gap down about 180

points indicated by GIF Nifty you know

correspondingly Nifty may not get down

180 points uh that's because you know

Nifty future premium May shrink today so

that is one thing second thing uh how

far this GI Nifty is reliable we have

seen in the past so in this kind of

situations uh it is not even 50%

reliable uh the damage for our Market

should not be big you know why because

you know no matter what happens you know

D look at their face you sell how much

you want to sell we don't care we will

buy

equally in the last four trading

sessions

FAS have sold for 20,000 CR 20,000 CR is

approximately 2 and half billion US

dollar you know uh this is a big figure

once upon a time I remember if FIA sell1

billion you know Nifty will fall 3 4% 2

and half billion fall Nifty would have

fallen about

10% but nowadays that is not happening

why because domestic institutions are uh

willing to absorb no matter how much the

f are selling so F have sold for 20,000

CR in last four pred session the

domestic institutions bought

equally uh same 20,000 CR so because of

that you know markets did not fall much

so sometime know huge gap up you know

domestic institutions may come and place

a buy order in the morning itself they

will try to stabilize but anyway our

Market is going to be volatile today

because in addition to the global cues

we have a local issue that's a RBA

policy though RBA policy is expected to

be a

non-event uh number one there is no

going there's going to be no change in

interest rate but however RBA governance

comment and because of this uh uh

Japanese Market fell more than 10% on

single day us economic recession and

this and that so uh this external

developments so there is a possibility

RBA Governor may sound very

cautious usually RBA Governor has always

been uh optimistic but this time he may

sound some cautious cautious and that

may affect some

sentiment but in fact the banking stocks

have been hugely underperforming

and Nifty has not even uh Nifty has

fallen about

3% not even 3% from the high but Bank

Nifty I think it has fallen about 5

6% so it is because of defensives uh and

uh other sectors you know the markets

are looking good uh not so bad but

whereas uh the problem in banking sector

continues so uh there can be you know uh

there is a possibility you know

intentionally if ARB Governor speaks uh

doly and if there is a short covering in

Bank Nifty uh that that possibility is

also not ruled out but you remember that

is what happened yesterday because the

people did not want to carry short

position ahead of the RBA policy so that

is why they uh covered the shorts that

is why the bank Nifty shot up more than

200 point in last 30 minutes so that is

the kind of move is expected as I told

you uh Nifty you know uh yesterday I

told you looking at the open interest

Nifty is likely to close between 24100

and

24500 maybe now may have to revise the

uh downside Target to maybe

24,000 so people who are conservative

they they have sold 24,000 fo and 24500

call so it's likely to be in this

range now once again because there a 200

Point Gap gap down so we may have to

speak this one you know markets are

taking support at

24,000 multiple times at least four five

times in the last one and half month so

therefore you know it's very very

crucial that Nifty do not close below

24,000 that's one thing so number one if

Nifty closes below 24,000 it's going to

be very very

dangerous now on the higher side okay

Nifty technically became short at

24350 and after that markets were very

very volatile but Nifty has never

crossed that

24350 as in when it went close to that

you know the selling came and I uh so

therefore if Nifty Clos

above 24 350 you know so we can say this

bearishness is over but at the same time

bullishness may not set in in that case

we can safely assume that Nifty is going

to trade between 24,000 on the downside

25,000 on the upside it's going to be a

consolidation probably consolidation

with the kind of a positive

bias then Market will turn bullish only

you know uh if Nifty crosses uh the uh

the recent high that is about

25,000 so that is a view for the next

few weeks right so last few last two

trading sessions the India came down but

probably now you know with this kind of

gap down the India may go higher so

anyway so this is a weekly expiry once

this is over this week you know weekly

expir Traders you know positional

Traders got into lot of trouble because

Gap up gap down Gap up Gap down a gap up

then come down you know Gap up then

continue the rally you know it was a

very very difficult week so let us hope

that this difficult week is over at

least the markets start stabilizing the

market going up and down is not a

problem but you know 200 Point Gap up

then 200 300 Point Fall then 200 point

gap down then 300 point up so this

volatility kills the Traders so let us

hope Market stabilize at some point of

time so the volatility has been uh the

main thing in this week highlight so

hope you enjoyed watching this video

thank you for watching