Pre-Market Report, September 17, 2020

  Pre-Market Report:

• US markets ended mixed.
  
  
• Fed indicated a lower interest rate for the next 3 years.
  
  
• That is good for equity markets in long term.
  
  
• That is also good for Emerging Markets.
  
  
• Low interest means, lot of Dollar Carry trades.
  
  
• But the reaction of world markets is muted.
  
  
• Asian markets are mostly trading with negative bias.
  
  
• SGX Nifty is also down, now trading around 11520.
  
  
• Yesterday Reliance hit a fresh all-time high.
  
  
• Then the profit booking came.
  
  
• Banking stocks are struggling to recover.
  
  
• Bank Nifty was more than 2.5X Nifty, just a few months before.
  
  
• But due to the huge outperformance of IT stocks and Reliance, huge underperformance of Banking stocks, now Bank Nifty is less than 2X of Nifty.
  
  
• Despite huge outperformance by HDFC Bank, Bank Nifty is just up by 100 points.
  
  
• Bank Nifty fell 3000 points but struggling to recover even one-tenth of that fall.
  
  
• The trend may continue until the end of expiry.
  
  
• Interest on interest case comes up next Thursday.
  
  
• That may become a trigger for meaningful short covering in Banking Stocks.
  
  
• On August 31, Nifty future touched 11795 and fell to 11350.
  
  
• After that Nifty future has not crossed 11600.
  
  
• Yesterday was the first time, Nifty future crossed 11600.
  
  
• That is a bullish sign.
  
  
• So the next target will be 11800.
  
  
• But to reach that target, Bank Nifty has to recover.
  
  
• Nifty future is just 200 points from month high but Bank Nifty future is down by 2600 points.
  
  
• Markets are likely to be volatile due to weekly expiry.
  
  
• Yesterday ICICI Bank and HDFC Bank offered some hope for Bank Nifty.
  
  
• Will that continue? That is a million-dollar question now.
  
  
• Nifty future may trade between 11500 and 11640.

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