Good Start, Bad Closing | Post Market Report 06-Aug-24

P R Sundar

6 Aug 202405:15

Summary

TLDRIn the post-market report, PR Sund discusses the extreme volatility and disappointing close of the exchange markets, with Nifty and Bank Nifty experiencing significant falls from their intraday highs. He highlights the contrast with Japan's market recovery and the lack of domestic institutional support reflected in the Indian market's performance. The script also touches on the impact of FII sales, the fluctuating NASDAQ futures, and the challenges faced by traders due to market unpredictability. Sund emphasizes the importance of caution, as the market is expected to be challenging in the coming months, and the need for US market stabilization for any hope of recovery.

Takeaways

📉 Market Volatility: The script highlights the extreme volatility in the exchange markets, with significant intraday fluctuations.
📈 Recovery in Japan: Despite the Japanese market closing 10% lower the previous day, it managed to recover all losses the next day.
📉 Continued Decline in India: Indian markets continued to fall, with Nifty and Bank Nifty experiencing substantial drops from their intraday highs to lows.
💹 FII Selling Pressure: Foreign institutional investors (FII) sold about 10,000 crores in a single trading session, a stark contrast to the last 7 months' sales of only one lakh crore.
💼 Domestic Institutional Support: Domestic institutions invested an equivalent amount to what FII sold, but this did not reflect positively in the market's performance.
🌐 Global Market Influence: The script mentions the impact of global markets, particularly the US and Europe, on the Indian market's direction.
📊 India VIX Decrease: There was a slight decrease in the India VIX, indicating a reduction in market volatility fear, but not significant enough to stabilize the market.
📈 Market Spikes and Falls: The speaker predicts that the market will not fall vertically but will experience intraday spikes followed by further declines.
🏦 Banking Sector Struggles: The Bank Nifty, which had previously been high at 53,000, fell below 50,000, indicating a significant downturn in the banking sector.
📊 Support Level Testing: The Nifty's support level of 24,000 is being tested repeatedly, suggesting that it may eventually break if the market conditions do not improve.
🚫 Urgent Caution Needed: The speaker advises extreme caution in the market, hinting at the possibility of further declines without stabilization in the US market.
🗣️ Potential Rate Cut Rumors: There are unconfirmed rumors of an emergency meeting to discuss interest rate cuts, which could potentially impact the market direction.

Q & A

What was the overall market trend described in the report?
-The report describes a very volatile market with a disappointing close. The Nifty fell more than 400 points from its intraday high to low, and the Bank Nifty fell even more, indicating a significant downturn in the market.
How did the Japanese market perform in comparison to the Indian market?
-The Japanese market had closed about 10% lower the previous day but managed to recover all of its losses. In contrast, the Indian market not only fell significantly the previous day but also continued to fall further on the day of the report.
What was the impact of foreign institutional sellers (FII) on the market?
-FII sold for about 10,000 crores in a single trading session, which is a stark contrast to the last 7 months where they only sold one lakh CR. This massive selling by FII seems to have had a negative impact on the market.
How did domestic institutions respond to the selling by foreign institutional sellers?
-Domestic institutions put in an equivalent amount of money to what the FII sold, but this did not reflect positively in the market's performance, neither on the way up nor down.
What was the state of the broader indices like next 50, midcap, and small cap?
-The broader indices such as next 50, midcap, and small cap all fell more significantly than the Nifty, indicating a broader market downturn beyond just the major indices.
How did the India VIX move during this period?
-The India VIX came down, but not by a significant amount, only about 8%, suggesting that market volatility was still high but not escalating drastically.
What was the situation with the banking stocks as described in the report?
-Banking stocks, particularly the Bank Nifty, were described as very weak. The Bank Nifty fell about 7% from its all-time high, which is a substantial drop compared to the overall Nifty's 4% fall.
What was the significance of the 24,000 level for the Nifty?
-The 24,000 level for the Nifty was a significant support level that was tested multiple times. The report suggests that if a support or resistance level is tested many times, it is likely to break eventually.
What was the report's stance on the market's future direction?
-The report suggests that the market is going to be challenging for the next few months and it's going to be very difficult, indicating a bearish outlook.
What was the report's advice regarding market participation?
-The report advises being very cautious in the market, implying that the current conditions are risky and require careful consideration before making any investment decisions.
Were there any rumors or reports about potential actions by financial authorities?
-There were rumors about an emergency meeting of the Federal Reserve to possibly cut interest rates, but nothing had materialized at the time of the report.

Outlines

00:00

📉 Volatile Market and Disappointing Close

PR Sund discusses the highly volatile nature of the exchange markets, noting a particularly disappointing close with Nifty falling over 400 points from its intraday high to low. The bank Nifty experienced an even more significant drop, exceeding 800 points. This decline is attributed to the Japanese market's recovery of a 10% loss, which the Indian market failed to match, despite domestic institutions investing an equivalent amount to offset foreign institutional sales. The market's lack of upward reflection of this investment is highlighted, along with the broader indices' performance, which fell more significantly than Nifty. The video also mentions the reduced India VIX, suggesting some level of stabilization despite the challenges expected in the coming months.

Mindmap

Keywords

💡Volatility

Volatility refers to the degree of variation of a trading price series over time. In the context of the video, it highlights the unpredictable and fluctuating nature of the exchange markets, where the speaker mentions the 'very very volatile' market conditions leading to a disappointing close. This term is central to understanding the theme of market unpredictability and risk.

💡Intraday High and Low

Intraday high and low are terms used to describe the highest and lowest prices of a security or index within a single trading day. The script discusses the Nifty and bank Nifty falling significantly from their intraday highs to lows, indicating a sharp decline in market value within the day, which is a key point in illustrating the market's instability.

💡Bank Nifty

Bank Nifty is a stock market index representing the banking sector of the National Stock Exchange of India. The script mentions the bank Nifty falling more than 800 points from its intraday high to low, emphasizing the sector's poor performance and its significant impact on the overall market sentiment.

💡FII (Foreign Institutional Investors)

FII stands for Foreign Institutional Investors, which are institutions that invest in a country's financial markets from another country. The video script mentions FII selling for about 10,000 crores in a single trading session, which is a substantial amount and indicates a lack of confidence in the market, contributing to the downward pressure on stock prices.

💡Domestic Institutions

Domestic institutions refer to financial institutions based within the country that invest in the local market. The script contrasts the actions of FII with domestic institutions, which have put in an equivalent amount of money, but this hasn't reflected positively in the market, suggesting a disconnect between institutional investment and market performance.

💡India VIX

India VIX is a measure of market volatility derived from the prices of index options on the Nifty 50. A decrease in India VIX, as mentioned in the script, indicates a reduction in market volatility, but the speaker notes it has not decreased significantly, suggesting that the market is still perceived as risky.

💡Open Interest

Open interest in the context of options trading refers to the total number of outstanding options contracts that have not been settled. The speaker speculates about the open interest without seeing the actual figures, but suggests that a large number of call options must have been written aggressively, indicating a high level of market participation and potential for significant price movements.

💡Support and Resistance Levels

Support and resistance levels are price points in the market that tend to have a higher concentration of buying or selling. In the script, the speaker talks about the Nifty's support level of 24,000 being tested multiple times, suggesting that if this level is challenged repeatedly, it may eventually break, indicating a further decline in prices.

💡Stop Loss

A stop loss is an order placed with a broker to sell a security when it reaches a certain price. The video mentions that the market shot up, triggering many stop losses, which led to a cascade of selling and contributed to the market's decline. This illustrates how stop losses can exacerbate market volatility.

💡NASDAQ Future

NASDAQ Future refers to futures contracts that track the NASDAQ-100 Index. The script notes a change in the NASDAQ future's performance, from being '300 plus Point higher' to 'only 100 point plus,' indicating a shift in market sentiment and the influence of global market movements on local indices.

💡Interest Rate Cut

An interest rate cut refers to a reduction in the interest rates set by a country's central bank. The script mentions rumors of an emergency meeting to possibly cut interest rates, which is a significant monetary policy tool that can influence market conditions. The speaker expresses uncertainty about this, highlighting the unpredictable nature of market influences.

Highlights

Exchange markets were extremely volatile with a disappointing close.

Nifty fell more than 400 points from its intraday high to low.

Bank Nifty's drop was even more severe, exceeding 800 points from high to low.

The market's reaction was disappointing after Japan's market recovered from a 10% drop.

Intraday volatility was significantly high, reflecting market instability.

Foreign institutional investors (FII) sold assets worth 10,000 crores in a single session.

Domestic institutions invested an equivalent amount, but market performance did not reflect this.

Japanese and European markets were higher, but US markets were going down.

NASDAQ futures initially showed a significant rise but later settled lower.

Markets are expected to be challenging for the next few months.

Yesterday's market saw a large sale of call options, leading to significant stop-loss triggers today.

Banking stocks, particularly Bank Nifty, showed a significant drop.

Bank Nifty fell 7% from its all-time high, indicating a heavy weight on the market.

Open interest in call options is suspected to be very high, influencing market recovery.

Domestic institutions attempted to close the Nifty above 24,000, a significant support level.

The support level of 24,000 is being tested repeatedly, indicating potential break.

US market stabilization is crucial for the recovery of Indian markets.

Rumors of an emergency meeting to cut interest rates, but no concrete action yet.

The current market situation calls for extreme caution among investors.