Global markets crack up to 7%, GIFT Nifty at 24,350; Key factors for Aug 05

All you need to know before market opens on Monday: Japan's Nikkei has plunged 14.7 per cent in the last three days after Bank of Japan unexpectedly raised interest on July 31. Yen up 10% in 3 weeks.

Stock market preview, Monday August 05, 2024: Equity benchmark indices are likely to open with a huge gap-down on Monday tracking weak cues from the global peers.

The resurgence of recession fears in the US economy, coupled with earnings disappointment by IT giants and renewed strength in the Japanese Yen has crippled global markets. That apart stock traders are also closely tracking developments in the Israel-Iran conflict.

At 07:00 AM, GIFT Nifty futures quoted around 24,350 levels – hinting at over 300 points gap-down on the Nifty 50 index.

Last week, the NSE Nifty 50 ended its 8-week winning streak with a loss of 0.4 per cent. Earlier in the week, the Nifty crossed the 25,000-mark for the first-ever time, and the Sensex had breezed past the 82,000 mark in intra-day deals. 

 

Going ahead this week, the markets may look to consolidate owing to the gloomy global mood. On Thursday, the RBI policy decision will be in focus. 

“Going forward, the chances of further consolidation seem elevated due to premium valuations, weak Q1 results, and ongoing global market consolidation. The RBI policy meeting could provide some hints towards an outlook on rates, while expectations are to maintain the status quo as of now., said Vinod Nair, Head of Research, Geojit Financial Services in a note.

Jittery global markets

On Friday, the US market extended losses as recession fears erupted after the nonfarm payrolls data missed expectations by a wide margin. Traders, however, are now expecting Fed to cut rates by 50 basis points (bps) in September and total of up to 100 bps by the end of this calendar year.

NASDAQ tumbled 2.4 per cent to 16,776. The S&P 500 and Dow Jones shed 1.8 per cent and 1.5 per cent, respectively.

The US 10-year bond yield plunged to 3.74 per cent. Among commodities, Gold futures hovered around $2,470 levels; while WTI Crude Oil futures dipped to $73 per barrel.

This morning in Asia, Japan’s Nikkei tanked 7 per cent to 33,370. The index has shed 14.7 per cent in the last 3 trading sessions after Bank of Japan (BoJ) unexpectedly raised interest rates to 0.25 per cent. Japan’s Nikkei is down 21 per cent from its peak hit on July 11. Meanwhile, the Japan’s currency, the YEN has surged 10 per cent in the last 3 weeks against the US dollar raising fears of further selling pressure by foreign investors.

Taiwan has plunged 6.5 per cent, Kospi has shed 4.4 per cent and Straits Times is down 3.2 per cent. Hang Seng and China’s Shanghai Composite indices are down 1.6 per cent and 0.9 per cent, respectively.

Trading strategy in Nifty for Monday, August 05 2024

Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One

There have been insignificant alterations to the price action for Nifty, though the overall market breadth turned a bit exhaustive, indicating a sign of caution.

From a technical standpoint, the Nifty index continues to maintain a position above all its major Exponential Moving Averages (EMAs), with robust nearby support identified around the subzone of 24,600-24,500. Also, till Nifty remains above this level, there shouldn't be any significant cause for concern for market participants.

On the higher end, the bearish gap on the daily chart, around 24,850-24,950, is likely to act as intermediate resistance, followed by the psychological mark of 25,000 in the near period. Moreover, a sustained breakthrough beyond this level is anticipated to catalyse the next series of rallies in the benchmark.

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates

Technically speaking, on Thursday, both the Sensex and the Nifty formed a spinning top candle. On Friday, they maintained below the spinning top candle's low, indicating weakness. As a result, in the short term, 25,080 and 82,130 will act as stiff resistance for Nifty and Sensex, respectively.

On the downside, 24,600 and 24,500 will provide significant support for the Nifty, while 80,500-80,400 will act as support for the Sensex in the immediate term.

Rupak De, Senior Technical Analyst, LKP Securities

The Nifty has drifted down after forming a spinning top on the daily timeframe. The RSI indicator has turned downward, indicating a bearish crossover. The market appears to be favoring ‘sell on rise’ traders as long as it remains below 24,800. On the downside, the Nifty might drift towards 24,530 or 24,400.

Trading strategy in Bank Nifty for Monday, August 05 2024

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates 

The Bank Nifty is still consolidating in the band of around 51,000-52,300. Thus, it is advised to wait for a decisive breakout of this range, which will determine the further direction for the Bank Nifty.

Where is the big money moving? Here’s an update on the latest FII, DII trading activity

On Friday, foreign institutional investors (FIIs) net sold stocks worth Rs 3,310 crore. On the other hand, domestic institutional investors (DIIs) were net buyers of shares to the tune of Rs 2,965.94 crore.

In the derivatives segment, FIIs net sold 21,170 contracts of index futures for a consideration of Rs 1,394.66 crore on August 02. FIIs net sold 14,429 contracts of Nifty futures; 5,044 contracts of Bank Nifty futures and 1,708 contracts of MidCap Nifty futures.

Pursuant to which, FIIs long-short ratio in index futures stood eased to 1.8:1. This ratio implies that foreign investors hold nearly 2 long positions in index futures for every bet on the short side. The FIIs longs in index futures stood at 63.77 per cent.

Stocks in F&O ban period

Aditya Birla Capital, Birlasoft, Chambal Fertiliser, GNFC, Granules India, India Cements, IndiaMart and RBL Bank are the eight stocks in the futures & options (F&O) ban period on Monday. 

Primary market update

Ola Electric IPO was subscribed up to 38 per cent on Day 1 of the offer period. That apart, Picture Post Studios and Afcom Holdings IPOs were subscribed 6.2 times and 4 times, respectively.

Ciegall IPOand Dhariwalcorp IPO will close for subscription today. The former has garnered 1.3 times subscription, while the latter has seen demand rising up to 10 times of the allotted number of shares.