SELLING at higher levels? Post Market Report 13-Jun-24

P R Sundar

13 Jun 202406:15

Summary

TLDRIn the post-market report sponsored by Delta Exchange, PR Sund discusses the Nifty's performance, noting its closing just below 23,400 with the future also slightly below this mark. He highlights the Nifty future's premium being wiped out and the resistance at 23,500, which may weaken with repeated attempts. Sund also points out the underperformance of the banking sector and his profitable short straddle strategy. He mentions the significant selling by foreign and domestic institutions, suggesting a cautious outlook despite the market's bullish trend. Sund anticipates market consolidation with potential impacts from upcoming tax policy changes, and notes the broader market's positive performance despite the index's less impressive showing.

Takeaways

📉 The Nifty closed just below 23,400, with the Nifty future also closing slightly below this mark.
💡 Nifty future premium has been completely wiped out, now trading at a discount to the spot price by one or two points.
🔄 For the fourth straight day, Nifty future attempted to move towards 23,500 but failed to close above 23,400, indicating strong resistance at this level.
💰 The speaker made a significant profit from a short straddle in the July series, with a 100 rupee profit on 3,000 quantities, amounting to around 3.5 lakh rupees.
🏦 Bank Nifty underperformed, despite Nifty reaching a closing all-time high, suggesting a divergence in the performance of banking stocks.
📉 FMCG stocks experienced selling, with no clear reason given, and FAs (Foreign Institutional Investors) were net sellers for more than 3,000 crores.
📊 Domestic institutions also sold for about 500 crores, leading to a net sell of more than 3,500 crores without a significant market impact.
🕒 Selling activity started in the morning instead of the usual post-2 p.m. pattern, suggesting a change in market dynamics.
🌐 The speaker anticipates market consolidation, with global cues indicating otherwise, and advises caution due to potential tax policy changes.
📈 The broader market performed well, with more money flowing into mutual funds, especially midcap and small cap funds, despite index-level underperformance.
🎉 The speaker mentions a personal event, which limited their research, but expresses hope that viewers enjoyed the video.

Q & A

What was the closing level of the Nifty and Nifty future mentioned in the report?
-The Nifty closed just below 23,400 and the Nifty future also closed slightly below the same level.
What does the term 'Nifty future premium wiped out' imply?
-It means that the premium, which is the additional cost over the spot price for Nifty future contracts, has been completely eliminated, and now Nifty future is trading at a discount to the spot price.
Why is the resistance level of 23,500 significant in the script?
-The resistance level of 23,500 is significant because the Nifty future has repeatedly tried to move above this level for four straight days but has failed to close above it, indicating strong selling pressure at this point.
What is a 'short straddle' and why was it mentioned in the script?
-A short straddle is an options strategy where the trader sells both a call and a put option with the same strike price and expiration date. It was mentioned because the speaker used this strategy in the July series and made a profit when the market moved as expected.
How much profit did the speaker make from the short straddle in the July series?
-The speaker made a profit of more than 100 rupees per lot, with a total of 200 lots, resulting in a profit of around 3.5 lakh rupees.
What was the speaker's observation about the performance of bank Nifty compared to Nifty?
-The speaker observed that bank Nifty underperformed compared to Nifty. While Nifty reached a closing all-time high, bank Nifty was much lower, even on an intraday basis.
What was the speaker's view on the market's performance in terms of broader indices?
-The speaker mentioned that broader market indices, including midcap and small cap mutual funds, performed well, but at the index level, the performance was not very impressive.
What is the speaker's expectation for the market in the coming weeks?
-The speaker expects a consolidation in the market, with a broader range of 23,000 on the downside and 24,000 on the upside, as most of the positives have already been factored into the prices.
What factors might influence the market's direction according to the speaker?
-The speaker suggests that global cues and potential taxation issues from the BJP government, such as changes in FPA taxation or long-term and short-term capital gain tax, could influence the market's direction.
Why did the speaker mention the selling activity of foreign institutional investors (FIIs) and domestic institutions?
-The speaker mentioned the selling activity to highlight a potential cautious outlook returning to the market, as both FIIs and domestic institutions were net sellers, indicating a significant amount of selling pressure.

Outlines

00:00

📉 Stock Market Analysis: Nifty and Bank Nifty Performance

In the post-market report, PR Sund discusses the day's trading activities, highlighting that the Nifty closed just below 23,400, with the Nifty future also closing slightly below this mark. He notes the Nifty future premium has been wiped out, and trading is occurring at a discount to the spot price. The script mentions the Nifty's repeated attempts to move towards 23,500 but failing to close above this resistance level. Despite this, the presenter suggests that frequent testing of the resistance could weaken it. The bank Nifty's underperformance is also pointed out, with the presenter sharing his short straddle strategy in the July series that yielded significant profits. The selling pressure in FMCG stocks and the overall market's cautious outlook due to institutional and foreign investors' selling activities are also discussed. The presenter anticipates market consolidation with bullish sentiment but advises caution due to potential taxation policy changes.

05:00

🔍 Market Outlook and Personal Trading Insights

The second paragraph delves into the presenter's expectations for market consolidation, suggesting a broader trading range between 23,000 and 24,000. He acknowledges that most positive factors have already been priced in and expresses a personal opinion that might be subject to change. The presenter also touches on the performance of individual stocks and the broader market, noting an influx of money into mutual funds, particularly midcap and small cap funds. Despite this, he finds the index-level performance underwhelming. The presenter mentions a personal commitment that limited his research time and concludes by thanking viewers for watching the video.

Mindmap

Keywords

💡Nifty

Nifty is a term used to refer to the National Stock Exchange of India's benchmark index, which is a weighted average of 50 of the 1600 companies listed on the exchange. It is a key indicator of the overall market's performance. In the video, the speaker discusses the Nifty's closing value and its behavior in relation to certain resistance levels, indicating the index's role in gauging market sentiment and potential future movements.

💡Futures

Futures in the context of finance refer to a type of derivative contract where a buyer agrees to purchase an asset at a predetermined price at a specified time in the future. The speaker mentions 'Nifty future' which is a futures contract based on the Nifty index, and discusses the premium and discount of these contracts in relation to the spot price, which is significant for understanding market expectations and trading strategies.

💡Premium

In the context of futures, a premium is the additional cost over the current market price that one must pay to enter into a futures contract. The script mentions that the 'Nifty future premium completely wiped out,' which implies that the cost of the futures contract has fallen to match the current market price, indicating a shift in market expectations.

💡Discount

A discount in futures trading is the amount by which the futures price is below the current market price. The video script notes that 'Nifty future is trading one or two point discount to the spot price,' which suggests that the market is anticipating a slight decrease in the index's value by the time the futures contract expires.

💡Resistance Level

In technical analysis, a resistance level is a price at which an asset has a high probability of being sold, leading to a potential decrease in its price. The script discusses how the Nifty has faced resistance at the 23,500 level, indicating a price point where selling pressure is strong and the index has struggled to maintain gains.

💡Bank Nifty

Bank Nifty is a benchmark index that represents the performance of banking sector stocks in the Indian stock market. The speaker mentions that 'Bank Nifty underperformed,' which is a key observation for investors as it contrasts with the overall market performance and may signal sector-specific trends or concerns.

💡Short Straddle

A short straddle is an options trading strategy where the trader sells both a call and a put option with the same strike price and expiration date. The speaker shares a personal trading experience, mentioning a 'short straddle in July series,' which resulted in a profit due to the market's lack of significant movement, illustrating a specific trading strategy and its outcome.

💡FII (Foreign Institutional Investors)

FII refers to foreign investors who invest in a country's financial markets. The script notes that 'FIIs were net sellers for more than 3,000 crores,' indicating a significant outflow of foreign investment, which can impact market liquidity and sentiment.

💡Domestic Institutions

Domestic institutions are local financial entities that invest in their own country's financial markets. The video mentions that 'domestic institutions have also sold for about 500 CR,' showing another form of investment outflow that, combined with FII selling, suggests a broader trend of institutional selling.

💡Mutual Funds

Mutual funds are investment vehicles that pool money from many investors to invest in a diversified portfolio of stocks, bonds, or other assets. The speaker observes that 'more and more money is flowing into mutual funds,' which may indicate a shift in investor preferences towards diversified investment strategies, particularly in midcap and small-cap funds.

💡Consolidation

In financial markets, consolidation refers to a period of price stability or minor fluctuations after a significant price movement. The speaker predicts that 'the markets are likely to consolidate,' suggesting a period of stability or minor adjustments in the market's valuation, which is important for understanding potential market behavior in the near term.

Highlights

Nifty closed just below 23400, and Nifty future also closed slightly below the same mark.

Nifty future premium has been completely wiped out, now trading at a discount to the spot price.

For the fourth straight day, Nifty future attempted to move towards 23500 but failed to close above 23400.

The resistance at 23500 may weaken as Nifty repeatedly tests this level.

Bank Nifty underperformed, and banking stocks were underperforming since the morning.

A short straddle in the July series at 50,000 resulted in a profit of over 100 rupees in a single day.

The speaker made a significant profit of around 3.5 lakh rupees from a 200-lot short straddle.

Bank Nifty has not moved significantly on a close-to-close basis despite intraday highs.

FMCG stocks experienced selling, possibly due to block deals, with FAs being net sellers for over 3000 crores.

Domestic institutions also sold for about 500 crores, indicating a net sell of more than 3500 crores.

Selling pressure started in the morning, a change from the previous pattern of post-2 p.m. selling.

Both institutions and FAs turning net sellers may signal a return to a cautious market outlook.

The market is expected to consolidate with nine more trading sessions left in the June series.

The speaker anticipates a broader consolidation range of 23,000 to 24,000 for Nifty.

Positives seem to be already factored into prices, suggesting a potential plateau in the market's upward movement.

IT stocks and broader markets performed well, with more money flowing into mutual funds, especially midcap and small cap.

Despite the overall bullish market, the index level performance was not very impressive.

The speaker hints at potential upcoming taxation issues from the BJP government that could impact the market.

The speaker could not conduct extensive research due to a small function at their house.