Pre Market Report 29-Aug-2024

Summary

In this pre-market report, PR Sund discusses the jittery US market and its impact on Asian markets, noting a 7% drop in Media results despite good earnings due to high expectations. He highlights the Nifty's potential to close higher by 600 points, reflecting a 2% return. Sund also mentions FII as net sellers and DII as net buyers, emphasizing market volatility around monthly expiry. He provides a trade idea involving a ratio spread strategy for limited downside risk and an upside break near 27,000. Lastly, he touches on the weak banking stocks and their need to catch up with Nifty's all-time high.

Takeaways

• 📉 The US markets were jittery, leading to a decline in most Asian markets.
• 📈 Despite good media results, the stock price fell by about 7% due to high valuation.
• 🔚 Today is the last trading session of the August series for Nifty.
• 📈 Nifty is expected to close around 25,000, indicating a rise of about 600 points for the series.
• 📊 Since October, Nifty has shown a consistent monthly increase, now over 25% from November to August.
• 🔄 FIs have turned net sellers while domestic institutions are net buyers, impacting market volatility.
• 🏦 Banking stocks are weak, with HDFC Bank and ICICI Bank ADRs down despite Nifty's all-time high.
• 📊 Technically, Nifty is in a long position but can experience fluctuations without a straight upward trajectory.
• 📈 A trade idea was shared: buying 25,000 call options in December and selling double the quantity of 26,000 call options, a ratio spread strategy with no downside risk.
• 🔍 The speaker anticipates a challenging journey for the market and mentions potential adjustments to positions based on news and market movements.

Q & A

What is the current state of the US markets as mentioned in the script?

The US markets are described as being jittery and down, reflecting a sense of unease and instability.

How did the Asian markets respond to the US market situation?

The Asian markets are also down, indicating a global reaction to the US market's volatility.

What was the outcome of the media results in the script?

The media results were good, but the stock price fell by about 7% due to high expectations and the stock being priced to perfection.

What is the significance of the August series being the last trading session as mentioned?

The August series being the last trading session implies that it is the final opportunity for traders to make decisions or adjustments before the series ends.

What is the expected performance of Nifty for the August series based on the script?

Nifty is expected to be up about 600 points from the first trading session, which is a respectable return of more than 2%.

What has been the overall performance of Nifty since October last year?

Since October last year, Nifty has shown a very good return on a month-on-month basis, with an increase of more than 25% from the November series to the August series.

What is the current status of FII and domestic institutions in terms of buying and selling?

FII has turned net sellers again, while domestic institutions have turned net buyers again, indicating a shift in market dynamics.

Why are monthly expiries considered more volatile than weekly expiries?

Monthly expiries tend to be more volatile due to the larger scale of trading and potential for significant market movements compared to weekly expiries.

What is the current condition of banking stocks as per the script?

Banking stocks are looking very weak, with HDF Bank and ICICI Bank ADRs being down, while Infosys ADR was higher.

What is the technical outlook for Nifty according to the script?

Nifty is still long, meaning it has the potential to go up or down, and it does not move in a straight line, indicating a need for careful trading strategies.

Can you explain the ratio trade strategy mentioned in the script?

The ratio trade strategy involves buying a 25,000 call option in the December series and selling double the quantity of 26,000 call option in the same series. This strategy has no downside risk and an upper break near 27,000, allowing for profit in a specific market range.