Pre Market Report 04-Mar-2025

Key Concepts:

• US Tariffs: Increased tariffs on goods from Canada, Mexico, and China.
• Ukraine Crisis: Stalled peace negotiations and reduced US military aid.
• FII Selling: Continuous net selling by Foreign Institutional Investors (FIIs).
• Sell on Rise: Strategy of selling call options during intraday market rallies.
• Nifty Support Levels: Focus on 22,000 and 21,800 as potential support.
• SIP Impact: Concerns about retail investors stopping Systematic Investment Plans (SIPs) due to losses.
• LIC's Performance: Weakness in LIC Housing Finance stock.
• Market Downtrend: Current market condition characterized as a downtrend.

1. Impact of US Tariffs and Ukraine Crisis

• The US has proceeded with tariff hikes on goods from Canada, Mexico (25% each), and China (increasing from 10% to 20%). This has negatively impacted market sentiment in the US, leading to a significant fall in US markets, described as one of the worst in the last two months.
• Despite efforts to broker a peace deal, the Ukraine crisis persists, with reports indicating the US has halted military aid to Ukraine. This adds to the negative global sentiment.

2. Market Downtrend and FII Activity

• The Indian market is already under pressure, with Nifty falling 15%, midcaps 20%, and small caps 25%.
• The speaker highlights concerns about what will happen if global markets start correcting, given the current state of the Indian market.
• Since January 4th, FIIs have been net sellers for almost every trading day, selling over ₹1 lakh crore worth of shares.
• The speaker emphasizes the saying, "There is no support in a downtrend, there is no resistance in an uptrend," indicating the futility of relying on support levels in the current market.

3. Trading Strategy: Sell on Rise

• The speaker advises a "sell on rise" strategy, suggesting selling call options far out of the money during intraday rallies of 100-200 points.
• Despite open interest indicating 21,900 as a potential support, the speaker notes that SGX Nifty indicates an opening below 22,000, a 9-month low.

4. Nifty Support Levels and Market Structure

• The speaker mentions that Nifty repeatedly tried to touch 22,000 but failed to sustain above it, indicating weak support.
• The overall market structure is described as "very, very bad."
• The speaker mentions personally managing the situation by selling calls aggressively and buying put options.

5. Personal Trading and Tax Implications

• The speaker bought Nifty Bees in the cash market and at-the-money put options.
• While the put options provide profit during the market fall, the profit is considered business income and subject to tax this year.
• The loss from Nifty Bees will be treated as a capital loss and carried forward.

6. Tamil Channel Hacking

• The speaker's Tamil YouTube channel has been hacked, and efforts to restore it are ongoing.
• The hackers used innovative methods, making it difficult for YouTube to recognize the hacking.

7. Sectoral Weakness and Reliance's Impact

• An unexpected sell-off in Reliance Industries dragged the market down.
• Banking stocks are already weak, and metal stocks, which previously supported the market, may also face trouble.

8. Nifty's Performance Since January 2024

• On January 1st, 2024, Nifty was around 21,800, rose to 26,300, and has now returned to around that level.
• 21,800 is considered a good support level because investors since January are barely in profit.

9. Concerns About Retail Investors and SIPs

• The speaker expresses concern that retail investors may lose faith and stop their SIPs due to losses.
• This could remove a crucial support for the market, especially if FIIs continue to sell.

10. LIC's Performance and Market Support

• LIC Housing Finance is trading below book value and at a low P/E ratio, indicating its weakness.
• The speaker questions LIC's ability to support the market, given its own struggles.

11. Contrarian View and Market Bottom

• The speaker jokes that he is turning completely bearish, suggesting that the market may be bottoming out.
• He sarcastically remarks that the bottom is "just 22,000 points away."

12. Call for Government Intervention

• The speaker hopes that the Finance Ministry is monitoring the situation and will take measures to arrest the market fall.

Synthesis/Conclusion:

The speaker presents a bearish outlook on the Indian stock market, driven by global factors like US tariffs and the Ukraine crisis, coupled with consistent selling pressure from FIIs. He advises a "sell on rise" strategy and highlights the weakness in key sectors and even institutions like LIC. The speaker expresses concern about the potential loss of retail investor confidence and calls for government intervention to stabilize the market. Despite the overall negative sentiment, he humorously suggests that his bearishness might be a contrarian indicator of a potential market bottom.