Weekly - Bullish Engulfing Candle - Will Nifty Move Up? Pre Market Report 16 Sep 2024 Range Analysis

Summary

The pre-market report for September 16, 2024, recaps the Indian stock market's performance, highlighting Nifty's recovery with a 2% increase last week. FIA and DI increased long positions, while retail and prop traders leaned towards short positions. Sector-wise, FMCG and private banks saw gains, but public sector companies and oil & gas lagged. The US market rose on rate cut expectations, but Indian ADRs were mixed. Key events include the US FOMC meeting and India's trade data release, with technical analysis suggesting Nifty's range-bound movement.

Takeaways

• 📈 Nifty recovered from a 1.5% drop to increase over 2% last week, with a breakout driven by FI on Thursday.
• 🌐 Despite significant advances in Asian and European markets on Friday, Indian markets showed hesitation and did not react strongly.
• 📊 FIA increased their long position to 67%, while retail traders and proprietary traders increased their short positions, indicating a bearish sentiment among them.
• 🔄 Options open interest data suggests that retail traders might have faced losses due to the market breakout, while proprietary traders correctly anticipated it and may have profited.
• 📉 Sector-wise, FMCG, Private Bank, Media, and IT saw gains, while Public Sector, Oil, and Gas companies were laggards.
• 💹 Institutional cash market activity showed FIA and DI as net buyers, pumping nearly 5000 CR rupees into the market.
• 🌟 US market optimism was fueled by a potential 50 basis point rate cut, leading to significant gains across indices.
• 📉 Indian ADRs did not follow the US market rally, with most being flat or marginally down, except for Vipro which rose due to a New York airport project.
• 🛑 Key events this week include the US Fed FOMC meeting, with market expectations of a 50 basis point rate cut, which could impact market direction.
• 📊 Technical analysis indicates a bullish weekly pattern for Nifty, with resistance and support levels suggesting a potential range-bound market.

Q & A

What was the performance of Nifty last week according to the pre-market report?

Nifty was down 1.5% before the last week, but it increased over 2% during the week, recovering all the previous losses.

How did the FIA and DIA adjust their positions in the futures market last week?

FIA increased their long position by 2% to 67%, while DIA increased their long position by 3% to 39%. However, the majority of DIA's open interest is on the short side.

What was the stance of retail investors and proprietary traders in the options market a week ago?

A week ago, retail investors had more call option buyers than sellers, indicating a market breakdown on the downside but range bound on the upside. Proprietary traders, on the other hand, sold more call options and bought more put options, suggesting a breakout on either side.

What was the significant event in the US market that influenced global markets but didn't impact the Indian market immediately?

On Thursday night in the US, an FOMC member, the New York Fed president, mentioned a strong case for a 50 basis point rate cut. This increased the probability of such a rate cut to 50% from below 20%, which significantly advanced the US market on Friday.

How did the Indian market react to the US market's movement after the FOMC member's statement?

The Indian market did not react to the US market's movement after the FOMC member's statement and remained range bound.

What was the net buying by FIA and DI in the cash market last week?

FIA net bought for 2360 CR rupees and DI net bought for 2,500 CR rupees, pumping nearly 5,000 CR rupees into the market.

What are the key events or data releases to watch out for in the upcoming week according to the report?

Key events to watch out for include the US Fed FOMC meeting for interest rate decisions, Japan and China markets being on holiday, Europe's wage increase report, India's trade data, and New York Manufacturing Index.

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

Nifty has to hold above 25350 for an upmove towards 25500 then 25750. On the support side, it has shifted higher to 25250 then 25000.

What are the implications of the Indian government's decision to lower the wheat stock limit holding for the FMCG sector?

The Indian government's decision to lower the wheat stock limit holding to 2,000 metric tons from earlier 3,000 metric tons is expected to increase wheat supply into the market, which is positive for the FMCG sector.

What is the impact of the Indian government's decision to increase the edible oil import tax by 20%?

Increasing the edible oil import tax by 20% is likely to be negative for the FMCG sector as it may lead to higher costs for edible oils.