Pre Market Report 05-Sep-2024

Summary

In the pre-market report, the speaker discusses market consolidation following a significant drop in NASDAQ and S&P, with Asian markets showing signs of recovery. Nifty is expected to be volatile due to weekly expiry, with a potential gap up of over 100 points as per GIFT Nifty indications. The speaker highlights the impact of open interest on market movements and the significance of the all-time high reached in September. They also correct a previous error regarding support levels and emphasize the bullish sentiment despite recent market fluctuations. The focus is on key stocks like Reliance Industries and HDFC Bank, and the speaker advises investors to be cautious and traders to follow market trends.

Takeaways

• 📉 US markets are consolidating after a significant drop, with NASDAQ and S&P still facing challenges but showing signs of recovery.
• 🔼 Asian markets are mostly positive, contrasting with the previous day's expectations of a significant fall.
• ⏰ Expect high volatility in the Nifty due to weekly expiry, with a potential gap up of more than 100 points as indicated by GIF.
• 📈 The previous all-time high for Nifty was 25,333, and the current market dynamics suggest a struggle to surpass this level.
• 💹 The midcap and smallcap indices, excluding banking stocks, were positive, indicating a mixed market sentiment.
• 📈 Key ADRs like HDFC Bank, ICICI Bank, and Infosys were up, possibly due to the MSA rebalancing effect.
• 🔄 Market participants are actively trading options, with significant activity in calls for October and December, suggesting bullish expectations.
• 🚫 The speaker advises investors to be cautious due to potential fraud in the market, particularly in the SME IPO sector.
• 📊 Technical analysis suggests a long position for Nifty, with 24,975 as a key breakout level, but emphasizes the probabilistic nature of such analysis.
• 👀 Key stocks to watch include Reliance Industries, HDFC Bank, ICICI Bank, and Infosys, which significantly influenced recent market movements.

Q & A

What is the current market situation according to the pre-market report?

The US markets are consolidating after a significant fall, with NASDAQ and S&P still struggling but attempting to recover. Asian markets are mostly positive, and there is an expectation of a significant gap up in the Nifty index.

Why is the Nifty expected to be volatile today?

The Nifty is expected to be volatile due to the weekly expiry and the significant open interest added in the 25,300 call options, indicating that market participants are taking positions based on the expectation of the index's movement.

What was the all-time high achieved by Nifty on September 2, and what does it imply for the current market?

The all-time high achieved by Nifty on September 2 was 25,333. The current market participants are considering this level as a significant resistance, and their positions are based on whether Nifty will surpass this level.

What was the mistake mentioned in the script regarding the all-time high of Nifty?

The presenter mistakenly referred to the all-time high of Nifty futures (25,145) instead of the Nifty spot index when discussing support levels. The correct all-time high for the Nifty spot was 25,578.

What are the key support and resistance levels for Nifty as per the script?

The first support level is at 2578, which was the previous all-time high, and the second support is around 25,000, a level where Nifty became long after crossing 24,975. There is no clear resistance as the market is at an all-time high and in an uptrend.

What global events are expected to influence the market in the coming weeks?

The US jobs data, inflation data, and the Fed meeting are the key global events that could influence the market in the coming weeks, and the market may react to these events before taking a clear direction.

What is the presenter's stance on the current market for investors and traders?

The presenter suggests that the market is long and suitable for momentum traders but advises investors to be cautious due to potential fraud and market manipulation, particularly in the SME IPO segment.

What are the key stocks to watch according to the script?

The key stocks to watch are Reliance Industries, HDFC Bank, ICICI Bank, and Infosys, as they were significant contributors to the market's movement and may influence the recovery.

Why did the presenter mention the activity in the October and December call options?

The presenter mentioned the activity in the October 27,000 call and December 28,000 call options to highlight the market participants' bullish sentiment and their expectations of the market moving higher in the coming months.

What does the presenter mean by 'G effect' and how does it influence the market?

The 'G effect' refers to the impact of options and futures contracts expiring, which can lead to increased volatility and price gaps as market participants adjust their positions. This effect is particularly pronounced closer to the expiry dates.