Pre Market Report 13-Mar-2025

Pre-Market Report Summary

Key Concepts:

• Inflation data (US & India)
• RBI Comfort Range
• Rate-sensitive stocks (Banks, Autos, Real Estate)
• FII (Foreign Institutional Investor) selling
• Consolidation
• Nifty resistance and support levels
• Weekly expiry volatility
• Short covering
• ADR (American Depositary Receipt)
• DII (Domestic Institutional Investor)
• Mutual fund inflows
• Option writers

1. Inflation Data and Market Impact

• Indian Inflation: The inflation data came in at 3.69%, below the RBI's (Reserve Bank of India) comfort range of 2-6% (average expectation of 4%). This is considered positive for rate-sensitive stocks.
• US Inflation: Consumer Price inflation data was also lower than expected in the US.
• Market Reaction: US markets, particularly NASDAQ, recovered significantly due to the lower inflation data. Dow Jones Industrial Average, being an equal-weighted index, showed less recovery.
• Expected Impact on Indian Market: Expectation of positive movement in Indian banks, auto, and real estate sectors due to favorable inflation data.

2. Sectoral Performance and Outlook

• IT Sector: IT stocks dragged the market down yesterday morning. However, the recovery in NASDAQ suggests potential recovery or at least a halt in the decline of IT stocks in India. Infosys was the worst performer yesterday.
• Reliance Industries: Positive sentiment around Reliance Industries due to potential collaboration with Starlink.
• Overall Nifty: Despite potential underperformance of the broader market, Nifty is expected to perform slightly better.

3. FII Activity and Market Consolidation

• Persistent FII Selling: FIIs have been consistently selling in the Indian market. In March, they haven't been buyers in any trading session so far.
• Market Consolidation: The market is consolidating around the 22,500-22,550 level.
• Resistance Levels: The recent high of 22,700 is the immediate resistance, with 22,800 as a positional resistance.
• Support Levels: Nifty is expected to find support at yesterday's low of 22,400.

4. Market Volatility and Expiry Considerations

• Expected Range: Anticipated trading range for the day is 22,400 to 22,700.
• Volatility Factors:
  • Three-day weekend due to a holiday.
  • Upcoming inflation data from the US.
  • Traders squaring off positions due to uncertainty.
  • Weekly expiry of Nifty contracts.
• Last Hour Volatility: Expect increased volatility in the last hour of trading.

5. Market Outlook and Strategy

• Consolidation View: Expects market consolidation with no significant changes on a close-to-close basis.
• Breakout Level: Need to wait for a breakout above 22,700 for further upward movement.
• Target Range: Broad view for the month remains 22,000 to 23,000.
• IT Sector Watch: Recommends watching IT stocks for potential short covering and recovery. Infosys ADR was down for the third straight day.
• DII Support: Expects domestic institutions to try to close the March series positively.
• Mutual Fund Inflows: Mutual fund inflows are decreasing, with last month's inflows around ₹30,000 crore compared to ₹40,000 crore the previous month (a 25% decrease).

6. Regulatory Measures and Market Manipulation

• SEBI Measures: SEBI (Securities and Exchange Board of India) has taken measures to restrict the number of contracts that large FIIs can trade.
• Impact of Measures: These measures may make it difficult for entities like "Gen Street Millennium" to manipulate the Indian market.

7. Conclusion

The market is expected to consolidate with potential volatility due to expiry and global cues. While FII selling persists, domestic institutions are likely to provide support. The key level to watch is 22,700 for a potential breakout. The speaker suggests monitoring IT stocks for recovery and acknowledges the favorable environment for option writers due to the lack of abrupt market movements.