Pre Market Report 14-Jun-2024

Summary

In the pre-market report, PR Sund discusses the mixed US market performance with Apple surpassing Microsoft as the world's top stock. Asian markets are flat, and despite significant selling by FIIs and domestic institutions, the market remains resilient. Sund anticipates Nifty to trade positively between 23,000 and 24,000, with a focus on the last hour of trading before the holiday weekend. He shares a strategy involving call and put options, highlighting the importance of retail participation and the potential for IT and banking stocks to drive Nifty towards 24,000. The summary also touches on the volatility crash and its impact on traders and the importance of a balanced options strategy.

Takeaways

• 📉 The Dow Jones Industrial Average closed lower, while the NASDAQ and S&P 500 ended higher in the US markets.
• 🏆 Apple has surpassed Microsoft to become the number one stock in the world.
• 🌐 Asian markets are experiencing muted performance, with the Nifty index showing only slight gains.
• 💸 Foreign Institutional Advisors (FIIs) sold more than 3,000 crores, while domestic institutions bought more than 500 crores, indicating a shift in market sentiment.
• 📈 Despite selling pressure, the broader markets outperformed, with banking stocks and FMCG seeing a decline.
• 🔢 The speaker anticipates the Nifty to trade between 23,000 and 24,000, with a positive bias, and believes 23,000 will be held by the Bulls.
• 📅 Trading activity is expected to be significant before the holiday, as traders may book profits ahead of a 3-day long weekend.
• 🕒 The last hour of trading on Fridays is often crucial, with retail selling potentially influencing the market more than institutional selling.
• 📊 The Nifty's performance above or below 23,400 will be a key indicator of market direction in the coming sessions.
• 📝 The speaker's son executed a neutral options strategy, expecting moderate bullish movement without extreme volatility.
• 📊 Bank Nifty's performance has been disappointing despite overall market highs, with the speaker highlighting the importance of HDFC Bank and Axis Bank in influencing the index.
• 📉 Volatility has been decreasing, which benefits those with existing positions but is less attractive for new trades due to lower option premiums.

Q & A

What is the current status of the Dow, NASDAQ, and S&P 500 markets mentioned in the script?

The Dow was down, while NASDAQ and S&P 500 were higher.

Which company has recently overtaken Microsoft to become the number one stock in the world according to the report?

Apple has beaten Microsoft to become the number one stock in the world.

How are the Asian markets performing, as described in the script?

Asian markets are described as muted and almost flat, with Nifty only up by 10-20 points.

What was the situation with FIA and domestic institutions in terms of selling and buying in the market?

FIA was selling more than 3,000 crores, while domestic institutions were buying more than 500 crores, indicating a mixed sentiment.

How did the broader markets perform, according to the script?

The broader markets outperformed well, with only banking stocks and FMCG experiencing a downturn.

What is the speaker's expectation for the Nifty index in the near term?

The speaker expects the Nifty to trade between 23,000 and 24,000, with a positive bias.

What is the significance of the upcoming holiday for traders, as mentioned in the script?

The upcoming holiday means traders may not want to carry positions over the long weekend, leading to potential profit booking.

What was the speaker's son's trading strategy involving call and put options?

The strategy involved buying a 23,200 call option, selling a 23800 call option, and selling a 22800 put option, expecting the market to be bullish but not ultra-bullish.

How has the volatility been behaving in the market according to the script?

Volatility has been crashing, falling by 10% the day before yesterday and by 6% yesterday.

What is the speaker's view on the performance of IT and banking stocks in relation to the Nifty's next target?

The speaker notes that despite the markets being high, IT and banking stocks, such as TCS and HDFC Bank, need to perform for the Nifty to reach the next target of 24,000.

What is the speaker's advice regarding option trading in the current market conditions?

The speaker advises having a combination of both buying and selling options rather than pure naked selling due to the low premiums and potential for market volatility.

Outlines

00:00

📊 Market Overview and Trading Insights

The video discusses the mixed closure of US markets with Dow down and NASDAQ and S&P 500 up. Apple has overtaken Microsoft as the top stock globally. Asian markets are mostly flat, and the Nifty index shows minimal movement. There was significant selling by Foreign Institutional Investors (FIAs) and some buying by domestic institutions. Despite this, the market didn't fall significantly, with broader markets outperforming. The banking and FMCG sectors experienced some selling pressure. The speaker expects the Nifty to trade between 23,000 to 24,000 with a positive bias. The trading day ahead of a long weekend will be interesting, particularly in the last hour, and there's an observation on the pattern of institutional and retail selling.

05:02

💡 Trading Strategies and Market Expectations

The speaker shares a trading strategy involving Nifty options, expecting the Nifty to settle around 23,800 in the next two weeks. There's a discussion on the performance of Bank Nifty and how a short straddle strategy has yielded significant profits. The impact of open interest and the behavior of banking stocks, especially HDFC Bank, is analyzed. The IT sector's performance, including stocks like TCS and Infosys, is highlighted. The speaker emphasizes the importance of volatility in trading, advising a combination of buy and sell options due to low premiums. The performance of key banking stocks and their role in driving market momentum is also discussed.

Keywords

💡Pre-market

Pre-market refers to the period before the official opening of the stock market for trading. In the context of the video, it sets the stage for discussing the current state of the markets and the performance of different stocks before the market officially opens. The script mentions a 'pre-market report' which indicates the speaker is providing an analysis based on the information available before the market starts.

💡Dow

The Dow Jones Industrial Average (Dow) is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. In the video, the Dow is mentioned as being 'down,' indicating a decrease in the value of the 30 companies it represents, which is a key indicator of market sentiment on that particular day.

💡NASDAQ

NASDAQ is an American stock exchange known for listing technology and biotechnology companies. It is an acronym for National Association of Securities Dealers Automated Quotations. The script mentions NASDAQ being 'higher,' which means that the overall value of the companies listed on this exchange has increased, reflecting a positive market trend.

💡S&P 500

The S&P 500, or Standard & Poor's 500, is a stock market index of 500 leading companies listed on the US stock exchanges. It is widely regarded as a benchmark for the overall performance of the US stock market. The script notes that the S&P 500 is 'higher,' which suggests a positive performance of the representative companies on that day.

💡Apple

Apple Inc. is a multinational technology company known for its consumer electronics, software, and services. In the script, Apple is mentioned as having beaten Microsoft to become the number one stock in the world, indicating its market capitalization has surpassed that of Microsoft, reflecting its strong financial performance and investor confidence.

💡Asian markets

Asian markets refer to the stock exchanges and financial markets in Asia. The script describes these markets as 'muted' and 'almost flat,' suggesting little to no significant movement or change in the market indices, indicating a lack of strong bullish or bearish sentiment.

💡FII

FII stands for Foreign Institutional Investors, which are institutions that invest in a country's financial markets from outside that country. In the video, it is mentioned that 'FII is selling more than 3,000 crores,' indicating a significant amount of selling activity by foreign investors, which could influence market direction.

💡Domestic institutions

Domestic institutions refer to investment institutions that operate within their home country, as opposed to foreign institutional investors. The script notes that domestic institutions are 'buying more than 500 CR,' which suggests that despite foreign selling, there is significant buying activity from within the country, potentially supporting the market.

💡Bulls

In financial markets, 'bulls' are investors who have a positive outlook on the market and expect prices to rise. The script mentions that 'Bulls' believe '23,000 will be held,' indicating a level at which they expect the market index to find support and not fall below.

💡Nifty

Nifty is a stock market index representing 50 of the 1,600 companies on the National Stock Exchange of India. It is a key indicator of the Indian stock market's performance. The script discusses Nifty's expected trading range and its potential to close above a certain level, highlighting its importance in market analysis.

💡Call option

A call option is a financial contract that gives the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specified price within a specific time period. In the script, the speaker's son bought a '23,200 call option,' which indicates a bullish outlook on the market, expecting the price to rise above the strike price of 23,200.

💡Put option

A put option is the opposite of a call option; it gives the owner the right, but not the obligation, to sell an asset at a specified price within a certain period. The script mentions selling a '22800 put option,' which suggests a strategy that profits if the market price stays above the strike price, avoiding the need to sell at a lower price.

💡Volatility

In finance, volatility refers to the degree of variation of a trading price series over time. The script discusses the 'volatility crash,' indicating a significant decrease in the market's expected price fluctuations, which can affect option premiums and trading strategies.

💡Bank Nifty

Bank Nifty is a stock market index representing the performance of banking sector stocks on the National Stock Exchange of India. The script mentions that despite the overall market's performance, 'Bank Nifty is not going anywhere,' suggesting a lack of movement or growth in the banking sector, which is crucial for market direction.

💡Open interest

Open interest refers to the total number of outstanding contracts that have not been settled. In the script, it is mentioned that there isn't much open interest because 'people don't take positional view for one month two month,' indicating a trend towards short-term trading rather than long-term positions.

Highlights

Apple has overtaken Microsoft to become the number one stock in the world.

Asian markets are flat with no significant direction, including the Nifty index which is only up by 10-20 points.

FII sold more than 3,000 crores while domestic institutions bought more than 500 crores, indicating a mixed sentiment in the market.

Despite selling by FII and domestic institutions, the market did not fall, suggesting underlying strength.

The broader market outperformed with banking stocks and FMCG seeing a decline, possibly due to overvaluation.

The speaker believes that 23,000 will be held by the Bulls and expects Nifty to trade between 23,000 to 24,000 with a positive bias.

Trading will be interesting ahead of a holiday, with a 3-day long weekend, as traders may book profits.

The last hour of trading on Fridays is expected to be particularly interesting due to position adjustments by traders.

Institutional selling in the morning contrasts with retail selling after 2 p.m., indicating a shift in market dynamics.

The speaker's son executed a neutral options strategy, expecting the market to be bullish but not ultra-bullish.

Bank Nifty's performance has been disappointing despite overall market highs.

IT stocks, including TCS and Infosys, have not performed well despite positive news, with TCS struggling to cross 4,000.

Option writers are enjoying the volatility crash, with implied volatility falling by 10% and 6% on consecutive days.

Low option premiums make new trades less lucrative, suggesting a need for a combination of buy and sell options strategies.

Axis Bank, HDFC Bank, and State Bank are crucial for lifting Bank Nifty and continuing the market's upside momentum.

HDFC Bank's performance will be key to watch, as it has been doing well despite a downturn in banking stocks.

Transcripts

hi this is PR Sund welcome to pre-market

report sponsored by delta.

exchange us markets closed mixed Dow was

down NASDAQ and S&P 500 higher and more

importantly Apple has beaten Microsoft

now apple is number one stock in the

world Asian markets are you know I would

say muted is almost flat so

directionless even the gift Nifty is

just up by you know 10 20 points uh

nothing it's going to be almost

flat yesterday FIA is selling more than

3,000 crores the domestic institutions

buying more than 500 CR uh is a little

bit of disappointment for

Bulls after non-stop buying every day

the domestic institutions also join the

hands with the FAS to sell yesterday but

surprisingly yesterday the markets did

not fall for about the markets broader

markets have outperformed very well it

was only the banking stocks that came

down it went up uh fmcg also there was

some kind of a

selling so probably you know the fmcg

has run up too much in the last few

weeks but nothing to worry too much on

the downside I still believe that you

know uh 23,000 will be held by the

Bulls as I told you already I'm

expecting Nifty to trade between 23,000

to

24,000 probably with a positive

bias and today trading will be very

interesting number one ahead of the

holiday uh two day 3 day Monday is a

holiday so I had of a 3-day long weekend

uh Traders will not like to carry

positions home so they might like to

book the profits but who is going to

book the profits people who are holding

a long position or people who are

holding the short position so depending

upon that uh the last one hour will be

very interesting today after 2: p.m. the

market will be very very

interesting look at the last four

trading sessions the first three trading

sessions selling came after 2 p.m. but

those 3 days F and were buyers a net net

figure was

buying yesterday the selling has

happened in the morning itself and net

institutional was selling both fa and da

when it sellers so it'll be reasonable

to assume that you know if the selling

comes in the morning institutions are

selling if selling comes after 2 p.m. uh

it is the retail people who are selling

so now retail people are getting more

and more powerful

so uh today on few things it going to be

very interesting and number one how the

markets are going to behave after all

the events are over so as of day before

yesterday evening all the events are

over but yesterday both institutions

decided to sell so whether the selling

is going to continue or it's going to be

one of incident so that we will know

after seeing today's data that's number

one number two for the last four trading

sessions as in when Nifty future traded

above to

23400 selling came intraday on a closing

basis Nifty future could not close above

23400 even the Nifty spot also so today

it'll be interesting to see whether

Nifty will be closing above 23400 or

below so that's another interesting

thing

uh I'm expecting some kind of a positive

bias irrespective of you know whether f

are selling or not right uh I will be

happy if Nifty uh goes into the next box

23500 to

24,000 uh in fact yesterday my son has

taken a strategy if you want I can share

that strategy uh he bought

23,200 call option so so he bought

23,200 call option sold 23800 call

option and also sold 22800 put

option so this was a 1 is to 4 is3 ratio

trade and the expectation is that

markets will be bullish but will not be

ultra

bullish he will make uh maximum profit

if Nifty goes and settles somewhere

around

23800 in the next 2 weeks so we still

have nine more trading

sessions so however it was a neutral

strategy there was no credit or no debit

in case Market goes down so there might

be some problem but you know he will

start adjusting the

positions so in fact he has taken a bank

Nifty short stradle a few days before in

July series and that has given very good

result and because you know though Nifty

is going higher Bank Nifty is not going

anywhere and Bank Nifty is just making a

bigger intraday move but on a close to

close basis for the last one week it did

not go anywhere so 3,000 quantity of

Bank Nifty shot stle has given almost 15

lakh rupees profit as of now so we still

have how many more six more weeks for

July six maybe seven more weeks I don't

know I have to check July is five weeks

or four weeks I don't know

so uh today you don't see much in the

open interest because nowadays

because of uh you know uh huge moves uh

people don't take you know positional

view for one month two month mostly

people trade with the shortterm like one

day expiry two day expiry 3day expiry

and they got out so because of that you

know uh I don't see much open interest

in the monthly options and people are

just creating a short-term

trads so today is a Friday so the open

interest will start building up for the

weekly series so so that may also have

some

effect yesterday though banking stocks

were down HDFC Bank was doing well so

today we have to see whether HDFC Bank

supports so I would say the bank Nifty

uh performance is actually disappointing

for Bulls so who knows uh in fact though

markets are at such a high place you

know both Banking and it stocks even

there was some good news for Pro you

know the it stocks were going higher but

still TS and infosis not doing

well just few months before TCS block

deal happened around uh 4,42 rupees I

think and you know uh after that it is

struggling to cross 4,000 SO trading

around 3,900 something so who knows if

this it and banking starts start picking

up you know 24,000 will be the next

Target for for Nifty but probably uh it

is too much of expectation for that to

happen in this series who knows probably

in July Series this may happen so

meanwhile option wrers are enjoying the

volatility crash everyday volatility

coming down day before yesterday it fell

by 10% yesterday it fell 6% you know

keeps on

crashing but one bad thing you know

anything happen there will be something

good and something bad good thing is

those who are having positions already

they are getting into good profit

because of IV crash but those who want

to take new trade you know the option

premiums are not lucrative now so that

is why it's always advisable to have a

combination of both buy and sell options

rather than pure naked selling so

otherwise with the low premium if you

sell if the markets make a violent move

you will be in trouble so uh let us see

so what is going to happen so keep

watching for Reliance and HDFC Bank as

usual and icsf bank is the one you know

uh after it a fantastic run from almost

300 Rupees to 1,100 rupees around 1,100

it has been a consolidating

consolidating and kotak bank is also uh

nothing to speak for many many years it

has been trading in a Range so finally

you know it is the responsibility lies

with uh axis Bank HDFC bank and State

Bank to bring up the uh Bank Nifty so

it'll be very very crucial for the

markets uh it stocks especially TCS and

infosis and banking stocks have to

perform for this upside momentum to

continue so hope you enjoyed watching

this video thank you for watching