"Infosys and Wipro ADR down" Pre-Market Report - Nifty & Bank Nifty 18 Sep 2024 Range, Analysis

SHARRA

17 Sept 202409:05

Summary

TLDRThis pre-market report video discusses key events influencing the Indian stock market on September 18, 2024, particularly Nifty and Bank Nifty. The focus is on the U.S. Federal Reserve's likely interest rate cut decision, either by 25 or 50 basis points, and its impact on market behavior. The video also highlights trading activity trends, volatility expectations, and global market influences like U.S. retail sales and oil price movements. It concludes by discussing Indian stock news, including the removal of windfall taxes and sector performance insights.

Takeaways

📉 The US Federal Reserve is expected to cut interest rates for the first time since the rate hike cycle began in February 2022, with a possible 25 or 50 basis point cut.
📊 The interest rate has remained at 5.5% since July 2023, with the Fed holding rates unchanged for 14 months, marking today as uncharted territory for Indian retail traders.
🤔 Market consolidation is unlikely today, with expectations of volatile movement in the second half, particularly influenced by option sellers closing positions.
📈 FIIs bought ₹500 crore in the cash market and ₹425 crore in the index futures market yesterday, but sold ₹35,800 crore in the index options market, similar to last week's trend.
🔄 FII's put-call ratio stands at 1.4, indicating a highly volatile market, with a potential for market rebound if put options are squared off today.
🛢️ US retail sales data came in weaker than expected, supporting a higher likelihood of a significant Fed interest rate cut, with 63% of analysts predicting a 50 basis point cut.
📉 Accenture delayed staff promotions, leading to a 5% drop in its stock price, affecting other IT stocks, including Indian ADRs Infosys and Wipro, which both dropped by 1%.
💡 The Indian government has announced the removal of the windfall tax on oil and oil-related products, which is expected to positively impact companies like Reliance.
💼 Infosys signed a positive agreement with Metro Bank for digital transformation, which may provide some support to IT stocks despite overall sector weakness.
📆 Key upcoming events to watch: UK's and Europe's consumer inflation data releases later today, along with the critical US Fed interest rate decision and press conference tonight.

Q & A

What is the main topic of the video script?
-The video discusses the pre-market report for the Indian stock market on September 18th, 2024, focusing on Nifty, Bank Nifty, and the upcoming US Federal Reserve's interest rate cut.
What are the expectations regarding the Federal Reserve's interest rate cut?
-The expectation is that the Federal Reserve will perform its first interest rate cut, with the possibility of either a 25 or 50 basis point reduction.
How has the US Federal Reserve handled interest rates since July 2023?
-Since July 2023, the Federal Reserve has kept interest rates unchanged at 5.5% for 14 months, after raising rates since February 2022.
How might the Indian stock market react to the upcoming rate cut decision?
-The market is expected to move violently, especially in the second half of the day, due to the anticipation of the Fed's rate cut decision. Option sellers might close their positions, increasing the market volatility.
What is the significance of the high put-call ratio (PCR) mentioned in the script?
-The high put-call ratio of 1.4 suggests that a larger number of put options have been sold, which could indicate hedging or anticipation of a potential rebound in the market.
What was the trading activity of FIIs (Foreign Institutional Investors) on the previous day?
-FIIs bought around 500 crore rupees in the cash market and 425 crore rupees in the index futures market, but sold over 35,000 crore rupees in the index options market.
How did the US stock market perform the previous day?
-The US stock market closed flat to positive. The Dow Jones was down marginally by 0.4%, the S&P 500 increased by 0.3%, and the NASDAQ rose by 2%.
What impact did Accenture's staff promotion delay have on the market?
-Accenture's decision to delay staff promotions led to a 5% drop in its stock, affecting other IT stocks, including Indian ADRs like Infosys and Wipro, which also declined.
What is the impact of the Indian government's removal of the windfall tax on oil?
-The removal of the windfall tax on oil and oil-related products, effective from today, is expected to positively impact companies like Reliance and other oil producers.
What are some key market events to watch out for during the day?
-Key events include the UK's consumer inflation data at 11:30 AM, Europe's consumer inflation data at 2:30 PM, and the US Federal Reserve's interest rate decision and press conference later in the night.

Outlines

00:00

📉 Pre-Market Report: Interest Rate Cut Expectations and Market Behavior

The video script discusses the pre-market report for September 18, 2024, focusing on the Nifty and Bank Nifty markets. The speaker anticipates the Federal Reserve's first interest rate cut, likely to be either 25 or 50 basis points, ending a 14-month period of unchanged rates. The script highlights the uncertainty for Indian retail traders due to the unprecedented nature of the event. The speaker shares their expectation of market volatility, particularly in the second half of the trading day, based on the behavior observed in previous weeks. The video also analyzes trading activities, with a focus on the index options market, where there's a significant net sell-off, indicating potential for increased market volatility. The speaker notes the high put-call ratio among foreign institutional investors (FII), suggesting a bearish sentiment. The script concludes with a disclaimer about the speaker's lack of open trade positions and a reminder that the analysis is for educational purposes only.

05:00

📈 Global Market Overview and Indian Stock News

The second paragraph of the script provides an overview of global market events and their potential impact on Indian stocks. It mentions a weak performance by service stocks, particularly Accenture, due to a delay in staff promotions, which negatively affected the sector. The script also discusses the flat closing of banking ADR stocks in line with the US market. It notes the increase in oil prices due to retail sales data and the removal of the windfall tax on oil and oil-related products by the Indian government, which is expected to positively impact oil production companies. Infosys signing an agreement with Metro Bank for digital transformation is highlighted as a positive development. The script also mentions the focus on renewable energy developers due to a funding announcement by REC Limited. The speaker provides a summary of market indicators, including a gap down opening for Nifty and a negative trade outlook, tempered by the potential for profit booking due to high FII put-call ratios. The video concludes with a reminder of upcoming economic data releases and the importance of the US Fed's interest rate decision, emphasizing the need for viewers to make informed investment decisions.

Mindmap

Keywords

💡Pre-market report

A pre-market report is an analysis or forecast of the financial market's likely performance before the market opens. In the context of the video, the speaker is providing a pre-market report for September 18, 2024, discussing expectations for the Nifty and Bank Nifty indices in the Indian stock market.

💡Fed

The Federal Reserve, often referred to as 'the Fed,' is the central banking system of the United States. It plays a crucial role in setting monetary policy, including interest rates. In the video, the speaker anticipates the Fed's first interest rate cut, which is a significant event impacting global financial markets.

💡Interest rate cut

An interest rate cut refers to a reduction in the interest rate set by a central bank, such as the Fed. This action is typically taken to stimulate economic growth by making borrowing cheaper. The video discusses the anticipation of a rate cut by the Fed, with speculation on whether it will be by 25 or 50 basis points.

💡Nifty

The Nifty is a stock market index that represents a basket of 50 of the 500 most actively traded stocks on the National Stock Exchange (NSE) of India. It is used as a barometer of the Indian securities market. The video discusses the expected behavior of the Nifty index in response to the Fed's interest rate decision.

💡Bank Nifty

Bank Nifty is a benchmark index that captures the performance of 12 major Indian banking sector stocks. It is a part of the broader Nifty index. The video speculates on how Bank Nifty might perform relative to the Nifty in the wake of the Fed's interest rate decision.

💡Option sellers

Option sellers are market participants who sell or write options contracts. They have the obligation to fulfill the terms of the contract if the buyer exercises the option. The video mentions that option sellers may close their positions before the Fed's decision, which could influence market volatility.

💡VIX

The VIX, or CBOE Volatility Index, is a measure of the stock market's expectation of volatility over the next 30 days. It is often referred to as the 'fear index.' The video discusses how changes in the VIX, such as an increase due to option premium movements, can reflect market sentiment.

💡FII

FII stands for Foreign Institutional Investor. These are large institutional investors, such as mutual funds, pension funds, and insurance companies, that invest in a country's financial markets from outside that country. In the video, the speaker discusses FII's trading activities and their potential impact on the market.

💡Put-call ratio

The put-call ratio is a market sentiment indicator calculated by dividing the total number of put options traded by the total number of call options traded. A high ratio suggests bearish sentiment, while a low ratio suggests bullish sentiment. The video highlights a high put-call ratio, indicating a bearish outlook among traders.

💡Windfall tax

A windfall tax is a tax levied on unexpected or extraordinary profits, often in the context of natural resources or commodities. The video mentions the Indian government's decision to eliminate the windfall tax on oil and oil-related products, which is expected to positively impact the market.

💡ADR

ADR stands for American Depository Receipt. It is a negotiable certificate issued by a U.S. bank representing a specified number of shares in a foreign company. The video discusses the performance of Indian company ADRs, such as Infosys and Wipro, which can influence the Indian stock market.

Highlights

The Federal Reserve is expected to perform its first interest rate cut on the 18th of September, 2024.

The interest rate cut could be either 25 or 50 basis points, following a rate increasing cycle that started in February 2022 and peaked at 5.5% in July 2023.

For 14 months, the Fed has kept the interest rate unchanged, making the upcoming decision uncharted territory for many traders.

Market expectations are for a violent market movement, especially in the second half of the trading day, mirroring the behavior seen on the last Nifty expiry.

Option sellers are expected to close positions before the Fed's decision, which could increase the VIX.

FII's (Foreign Institutional Investors) trading activity shows a net buy in the cash market and index future market, but a net sell in the index option market.

FII's put-call ratio is unusually high at 1.4, indicating a significant hedge or bearish sentiment.

US retail sales data for August showed a weaker macroeconomic picture, suggesting a higher chance of a more substantial interest rate cut.

The CME FedWatch Tool indicates a 63% chance of a 50 basis point interest rate cut.

Despite a flat trading day, the VIX increased by around 3%, indicating market nervousness.

Accenture's stock fell by nearly 5% due to a delay in staff promotions, affecting the entire sector including Indian ADRs Infosys and Wipro.

Banking ADR stocks closed flat, providing a neutral opening indication for the market.

The Indian government has removed the windfall tax on oil and oil-related products, which could positively impact oil production companies.

Infosys signed an agreement with Metro Bank for digital transformation, potentially supporting the market.

REC Limited is lending to renewable energy developers, which could put focus on related stocks.

The absence of a windfall tax is seen as positive for the market, and high PCR ratios might lead to profit booking, possibly making Bank Nifty outperform Nifty.

JK Cement, Biocon, Apollo Tires, H and C Land have short belt up, while Hero MotoCorp, Bosch Limited, Motherson Sumi, and Persistent have increasing open interest with a positive price close.

Chinese markets will open after a two-day holiday, and UK and Europe's consumer inflation data will be released during the market hours.

The US Fed's interest rate decision and press conference are the most important events to watch for the market.