Pre Market Report 22-Apr-2025

Key Concepts:

• Trump's economic policies (tariffs) and potential impact on US inflation.
• Federal Reserve (Fed) interest rate policy and its relationship to inflation.
• Market reaction to US political and economic events (specifically Asian markets).
• FII (Foreign Institutional Investors) and DII (Domestic Institutional Investors) activity.
• Nifty 50 index levels and potential targets (24,800).
• Upcoming corporate results (Reliance Industries, Axis Bank, Nestle).
• Market consolidation and trading strategies (cutting shorts, adding longs).
• Box theory for trading in consolidating markets.
• Time value in options trading.

1. US Economic and Political Situation:

• Trump's Policies and Inflation: PR Sundar highlights concerns about Trump's tariffs potentially causing a significant increase in prices (25%-50%), leading to higher inflation. This contradicts Trump's desire for the Fed to lower interest rates, which would further fuel inflation.
• Fed Independence: Sundar draws a parallel between Trump's pressure on the Fed chairman and the situation with Patel in India, suggesting a global trend of politicians interfering with central bank independence. He implies that Trump might remove the Fed chairman if rates aren't cut.
• Inflation Concerns: Sundar expresses concern that US inflation could surpass the 2022 high of 8.9% due to Trump's policies.
• Inconsistent Policies: Sundar criticizes Trump's fluctuating tax policies, citing the example of phone manufacturers where taxes were initially increased by 50% and then reduced to 0%.

2. Global Market Reaction:

• Asian Market Resilience: Despite a 3% fall in US markets, Asian markets, particularly the Gift Nifty, showed resilience, trading 30-40 points higher. This suggests a belief that Trump's policies may not ultimately prevail.

3. Indian Market Analysis:

• Bullish Sentiment: Sundar describes the Indian market as "fantastically bullish."
• FII and DII Activity: Both FIIs and DIIs were net buyers, contributing to the positive market sentiment.
• Nifty Target: The next logical target for the Nifty 50 is 24,800, although the timeline for reaching this level is uncertain.
• Corporate Results: The next major trigger for the market is the Reliance Industries results. FMCG results, particularly Nestle, are not expected to be strong. Axis Bank results are also upcoming.

4. Trading Strategies and Market Dynamics:

• Consolidation Strategy: Sundar suggests that if the market consolidates or falls slightly, traders should cut short positions and add long positions.
• Range Prediction: He anticipates a trading range of 24,000 to 24,500 for the next few days.
• Box Theory: Sundar refers to his "box theory," which is effective in normal, consolidating markets. However, he cautions that unexpected events, like those caused by Trump, can invalidate the theory.
• Time Value: He notes that if the market consolidates towards the end of the expiry, traders can profit quickly due to time value decay in options.

5. Workshop Announcement:

• Sundar promotes his upcoming workshop in Mumbai, emphasizing the importance of learning new skills during tough market conditions. He provides contact information and website details (workshop.prunder.com, prund.com).

6. Notable Quotes:

• "Either Trump will destroy America or America will destroy Trump." - Referring to the political and economic turmoil in the US.

7. Technical Terms:

• FII: Foreign Institutional Investors.
• DII: Domestic Institutional Investors.
• Gift Nifty: Nifty futures traded on the Gujarat International Finance Tec-City (GIFT City) exchange.
• Time Value: The portion of an option's premium that is attributable to the time remaining until expiration.

8. Synthesis/Conclusion:

PR Sundar's pre-market report focuses on the potential impact of US political and economic events, particularly Trump's policies, on global and Indian markets. He expresses concern about rising inflation in the US and its implications for the Fed's interest rate policy. Despite the uncertainty in the US, he maintains a bullish outlook on the Indian market, citing positive FII and DII activity and identifying key levels for the Nifty 50. He also provides trading strategies for consolidating markets, emphasizing the importance of adapting to unexpected events.