Pre Market Report 10-Feb-2025

Key Concepts:

• US Market Selling Pressure: Impact of US-China trade tensions and potential tariffs.
• Asian Market Performance: Mixed performance influenced by global cues.
• GIF Nifty: Indicator of potential market opening.
• Delhi Election Impact: Limited impact on the stock market.
• Trump Tariffs: Concerns about potential impact on the market.
• Artificial Intelligence Stocks: Initial enthusiasm fizzled out.
• Market Consolidation: S&P 500 trading within a narrow range.
• Volatility Index: Decline alongside market decline.
• RBI Policy Rate Cut: Limited impact on the market.
• FII and DII Activity: Reduced activity on Friday.
• Upcoming US Data: Consumer Price Inflation, Producer Price Index, and Retail Sales data.
• Market Breakout/Breakdown: Potential for market to break out or break down from consolidation.
• HDFC Bank and Reliance: Key stocks influencing market sentiment.

1. US Market and Global Cues:

• The US markets experienced selling pressure due to concerns about potential tariffs from the US on China, Mexico, and Canada.
• Trump announced he might impose a 25% tariff on steel and aluminum, which is a commodity-specific tariff, not country-specific.
• Asian markets showed mixed performance, with some in green and some in red.
• GIF Nifty indicated a lower opening by about 30-40 points.
• The speaker notes that the Indian market is not always following global cues.

2. Delhi Election Impact:

• The speaker argues that the Delhi election is unlikely to have a significant impact on the stock market.
• While BJP won with a comfortable majority, the percentage of votes was not very convincing, with only a 2% lead over the AAP.
• Only three state elections are considered very important: Uttar Pradesh (largest state), Gujarat (Prime Minister's home state), and the five state elections six months before the parliament election.
• Delhi is considered a very tiny state, and its election results are not expected to have a major impact on the stock market.

3. Trump Tariffs and Market Sentiment:

• The speaker expresses concern about the potential impact of Trump's tariffs on the market.
• Previously, the market reacted positively to Trump's policies, such as corporate tax cuts, but this time, the market is not showing enthusiasm.
• The US market has been consolidating within a narrow range, with the S&P 500 finding support around 5,800 and facing selling pressure around 6,150.

4. Indian Market Dynamics:

• The volatility index has come down, but the market has also come down, which is a concerning sign.
• The RBI policy rate cut did not have a positive impact on the market, with stocks across the board falling.
• The speaker notes that the market has fallen more than 300 points from the recent high, indicating that the selling pressure is not likely to subside easily.
• FII and DII activity was low on Friday, with both selling and buying figures less than 500 CR, but the market still made a significant move of more than 200 points.

5. Upcoming Events and Market Direction:

• The speaker mentions that all the events are over in India, but there are upcoming US data releases this week, including Consumer Price Inflation, Producer Price Index, and Retail Sales data.
• These data releases could potentially lead to a trending market in the US, which could influence the Indian market.
• The speaker believes that the Indian market cannot continue to consolidate between 23,000 and 24,000 for much longer and will eventually break out or break down.
• The probability of a breakout is considered higher, but the FII selling is a significant concern.

6. Key Stocks to Watch:

• HDFC Bank, ICICI Bank, and Infosys were all down on Friday and will be in focus.
• Reliance is struggling to cross 1300, and its performance is crucial for the overall market sentiment.
• HDFC Bank and Reliance together account for 25% of the market, so their performance is critical.
• HDFC Bank has recovered about 100 points out of the 150 points it fell in the first week of January.
• If HDFC Bank recovers by 50 rupees and Reliance recovers by 50 rupees, the overall market sentiment could turn around.

7. Conclusion:

• The speaker advises being careful, as Monday could be a trending market, especially if it opens flat with a 30-40 point plus or minus.
• The market is influenced by global cues, particularly US market trends and data releases.
• Key stocks like HDFC Bank and Reliance play a significant role in determining market sentiment.
• The potential for a market breakout or breakdown from the current consolidation phase is high, but FII selling remains a concern.