"Infosys and Wipro ADR down" Pre-Market Report - Nifty & Bank Nifty 18 Sep 2024 Range, Analysis
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
- ๐ 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.
- ๐ 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.
- ๐ค Market consolidation is unlikely today, with expectations of volatile movement in the second half, particularly influenced by option sellers closing positions.
- ๐ FIIs bought โน500 crore in the cash market and โน425 crore in the index futures market yesterday, but sold โน35,800 crore in the index options market, similar to last week's trend.
- ๐ 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.
- ๐ข๏ธ 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.
- ๐ 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%.
- ๐ก 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.
- ๐ผ Infosys signed a positive agreement with Metro Bank for digital transformation, which may provide some support to IT stocks despite overall sector weakness.
- ๐ 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
๐ 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.
๐ 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
๐กPre-market report
๐กFed
๐กInterest rate cut
๐กNifty
๐กBank Nifty
๐กOption sellers
๐กVIX
๐กFII
๐กPut-call ratio
๐กWindfall tax
๐กADR
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.
Transcripts
hello everyone this is the pre-market
report video for today 18th September
2024 for the near shock market in terms
of nifty and Bank Nifty finally the dday
has come most probably near 99% tonight
fed is going to perform their first
interest rate cut and the question is
whether 25 basis point interest rate cut
or 50 basis point interest rate cut I
mean this rate cut increasing cycle
started in February 2022 and peaked 5.5%
in July 2023 from that July 2023 to till
date 14 months in a row fed kept their
interest rate at post meaning for the 12
FMC meeting fed just they discussed and
did nothing kept the interest rate
unchanged hence today and tomorrow is
completely Uncharted Territory
especially for most Indian retail
Traders including myself so whatever the
market financial behavior what we
observed in the last 3 to four years is
irrelevant it's not the same that
doesn't mean we don't need to have
expectation since we are Traders and
investors we each one of us have our own
expectation without that no point to do
trade or invest I mean we are entitled
for that and most probably what I expect
it always go against it especially
intraday anyway this is what I expect I
don't think Market will consolidate
today rather expect it to move violently
at least in the second half like how it
behaved on last Thursday Nifty expiring
the logic behind that is very simple
most people don't carry forward the
position tonight especially option
sellers I mean here option buyers most
of them don't care maybe those who are
sitting with profit might close the
position other than that I don't think
option buyers will care to close on the
other hand option sellers most people
will try to close their position and as
a consequence based upon the direction
either call option premium or put option
premium will increase which in turn will
increase the vix I mean if required
please pause and have a look this is the
fia's yesterday trading activity on the
cash Market the net bought for around
500 CR rupees and also similarly on the
index future Market also the net bought
around 425 CR rupees which is okay but
the issue is index option Market I mean
the net sold for 35,800 CR rupees and
similarly yesterday also the net sold
for over 30,000 C rupees as we discussed
in detail in the last pre-market video
this is like exactly the same thing
happened last week in the Nifty index
Tuesday and Wednesday together they sold
like 80,000 C rupes worth of index
option and on the expiry day the net
bought for 50,000 rupes hence for me it
looks like the repeat of last week Nifty
just a disclaimer it's just my opinion I
have zero trade position open at present
don't make investment decision based
upon this anyway in the last video we
discussed on Monday they sold more call
options in direct contrast to that
yesterday they sold more put options I
mean added 3.6% more put option and in
addition sold 7% more hence if required
please pause and have a look this table
is very important in both long as well
as on the short side fii's put call
ratio is around 1.4 which is crazy High
same property Traders also got higher
sold put call ratio than the bought put
call ratio in an Ideal World all these
considered as hedge but here we cannot
consider that since if some of those put
option positions Squad of today means
Market could rebound but as I said
multiple times I could be wrong just for
info in the index future Market FIA is
holding near 68% long moving to US
market before their Market opening US
Government released retail sales data
for the August month on the monthly
basis core retail sales data without
food and fuel increased only by .1%
against the expectation of 2% and also
way below compared to July month data so
core inflation not good however with
fuel and food it increased by .1%
against expectation of decrease 2% so
the macro data is weaker hence it favors
higher interest rate cut in line with
that at present CME fed watch tool
indicating 63% chance for the 50 basis
point interest rate cut however despite
that understandably US market was
nervous hence it closed flat to positive
Dow Jones down very marginal
.4% S&P 5 increased very marginal .3%
and NASDAQ increased slightly 2% despite
the flat trading day vix increased
around 3% and moved near 17.5 here
though US market was okay and flat last
night it service stocks didn't perform
well I mean Accenture stock fell by near
5% because as per Bloomberg their staff
received the email that they're delaying
the staff promotion to next June which
supposed to happen this coming December
this didn't go well with the investors
since they think Accenture is postponing
due to the demand concern kind of anyway
as we know Accenture is the industry
leader so so all the stocks in those
sector got affected yesterday including
the two Indian ADR infosis and Vio both
of them down around 1% however banking
ADR stocks in line with the US market
closed flat hence the takeaway from ADR
is for now it stocks clear negative
banking stocks flat opening indication
then about gift Nifty early morning
today it closed at
2,422 equating it with spot Market it's
indicating 20 to 50 points gap down
opening then regarding oil because of
retail sales data surprise increase
without the increase of core retail
sales data which in turn increased the
oil price by 1% at the time of this
video double crude trading around 70 US
per barrel and Bren crude closed to near
74 us per barrel so those were the
things happened yesterday in the global
market now let's discuss the Indian
stock related news first of all finally
after July 2022
last night Indian government mentioned
on their gaset notification that
effective from today the windfall tax on
oil and oil related product will be zero
no more windfall tax so today we can
expect the market to react for it I
guess it's positive for Reliance and all
oil production company let's see second
in the ADR Market we discussed about the
negativity around it stocks but as I
said it was plainly due to Accenture
despite that infosis got the positive
news they signed an agreement with Metro
Bank for their digital transformation so
possibly this might support the market
today third in the aftermarket houss Rec
rural electrification Corporation issued
the statement that they signed a pack
that they're going to lend and fund
around 1.1 lakh rupees with the
renewable energy developers hence R and
some major renewable energy developer
stocks will be on Focus today so as a
summary US market closed to Flat still
gift Nifty indicating a gap down of 50
points and the weakness in it stocks is
not good thus for the moment it's
indicating a negative trade let's see
however no windfall tax is positive and
this crazy FIA High PCR ratio might
create some profit booking so possibly
Bank Nifty might outperform Nifty anyway
as per stock open interest JK cement
biocon Apollo tires H and as cland got
the short belt up on the other hand hero
motoc cop baj Auto Bosch limited mother
Suns and persistant got an increasing
open interest with a positive price
close indicating the long bu up then
about the things to look out after 2
days of holiday Chinese market will be
open today then during our Market hours
first at 11:30 UK's consumer inflation
data is due and at 2:30 p.m. Europe's
consumer inflation data is should
release and finally in the night very
very important us fed interested
decision and fed FMC press conference
are the some of the important items we
need to keep an eye out today here The
Wider Market expectation is to cut 50
basis point interestate cut if not it
will be disastrous then regarding
technical I think it's irrelevant today
so that's all in this video hope you all
got Smo information please consider
subscribing the channel and liking the
video so it will help me beat the
YouTube algorithm and also motivate me
to do more please don't make any
investation based on this as much as
advisor I'm doing this for me and
viewers educational purpose only thanks
for watching
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