SGX Nifty Cracks ‘350 Points’ as Zig-Zag Moves Continue!

  • Stock Market Analysis

The volatility from the last few sessions has been on another level. The Benchmark Nifty 50 index calmly made a top of 17,992.2 on 19 August 2022, but after that, the volatility has seen a massive spike. 

After yesterday’s unexpected rally of over 2.58% or 446 points, market participants have been caught off guard as the SGX Nifty tanked over 352 points from yesterday’s session to around 17,475, by 1:50 PM IST today. Unfortunately, the sharp fall has come on a day when the Indian markets are closed, not allowing investors to cut their losses. However, what is more, troublesome for investors is that tomorrow is the weekly expiry of the Nifty 50, and a lot of positions are built up for these weekly expiries. A sudden gap down opening on Thursday to account for today’s massive fall would lead to heavy losses in short put positions.

As per Tuesday’s data, a massive put option writing was seen across the option chain, all thanks to a staggering rally on the same day. The ~440 points up move on Tuesday made a lot of investors believe that a 2%+ gap down on Monday was just a knee-jerk reaction after Jerome Powell’s hawkish stance on interest rates in the Jackson Hole Symposium. This led to a build-up of heavy bullish positions including put writing which won’t get a chance to minimize losses on Thursday.

From 17,750 PE to 17,350 PE, every strike price has seen put writing on Tuesday. In fact, every strike price of 100 multiple in this range has an open interest of more than 1 lakh contracts each! The 17,500 PE has the highest OI of 1.39 lakh contracts and even this strike has become at-the-money, as per the current SGX Nifty price. To give you a measure of the confidence of bulls, even ITM put options were also written. Clearly, there will again be some blood on the street on Thursday, as it was on Monday. 

The current high volatility has minimized the significance of support and resistance as the market is making swift and agile moves on both sides. But, for the record, there is a support of around 17,350 (spot) which might be able to halt the fall this week. 

As I have mentioned in an earlier article, one of the best ways to trade this kind of roller coaster market is through hedged positions which would not only help to minimize overnight risk but also help to sustain zig-zag moves in the live market. 

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  • Raju Shinde @Raju Shinde
    Great article. your analysis is good.
    Like 0
  • kadar supermarket @kadar supermarket
    i have read all your 333 articles and after making heavy losses based on your recommendations i have only one thing to say..... SIR yeh toh tattie hai !!!!
    Like 4
    • Sayeed Ahmed @Sayeed Ahmed
      You should try Mutual funds
      Like 0
    • Sayeed Ahmed @Sayeed Ahmed
      You should try Mutual funds
      Like 0
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  • Devender Kumar @Devender Kumar
    what should I do book profit or anything tomorrow.
    Like 0
  • Devender Kumar @Devender Kumar
    i hold 44 lot of 39500 PE for tomorrow expiry. let see...
    Like 6
    • Vikram Nigam @Vikram Nigam
      put by or sell
      Like 0
    • Devender Kumar @Devender Kumar
      buy
      Like 0
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  • Vedant Joshi @Vedant Joshi
    The markets might open gap down.. But the gdp data, which is going to be strong.. Will make the market buy on dip and that will make a good Thursday.. May not the rally like Tuesday but for sure testing towards 40000 bn levels.. Also Fii have bought more than 4000 crore of inventory on Tuesday.. Should be green all the way.
    Like 1
  • shahrukh khan @shahrukh khan
    Market maker games....markup to trap retail and mark down to collect cheap inventory .....bought 3 lot at 39 PE...shud be  a good red thursday
    Like 0
  • tushar sorte @tushar sorte
    No need to worry as crude is going down and rupee improving, scenario will change after GDP data tonight. market is in strong bullish zone.
    Like 4
  • vikram kumar @vikram kumar
    be in positive or negative to make profit.. if keep jumping sides will be huge losses.. overall market will not go anywhere until next set of quarter results..
    Like 1
  • Raghunath Kesavanath @Raghunath Kesavanath
    Indian market is a bitcoin market anything can happen
    Like 2
  • JAMES Jam @JAMES Jam
    Good analysis as always .. trade mantra keep your Stop Losses tight n also Profits light … but i stick to my opinion that for Trading being Bearish( Strictly Sell on Rise) is no problem but Indian Mkts are in for a Bull Run which will test previous Highs n set a new High … due to very Strong Bullish Rounding Bottom pattern in Weekly n Daily Chart (August) … Trade with caution n Invest with Confidence
    Like 0
  • Indla Hanumantharao @Indla Hanumantharao
    there is no tool or kind of that anymore in the indian markets now . the only game is how to throw retailors to the dust on whatever side they are in , even going to the extent of closing down the market for some time.😃
    Like 0
    • ajay vasa @ajay vasa
      self financial and psychological profile is necessary before entering in markets. That will help to pick trades as it suits individuals.
      Like 1
    • shahrukh khan @shahrukh khan
      @Indla Hanumantharao try pitchfork with fib retracements or fans.....works on any instrument..market geometry ..
      Like 0
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  • K shah @K shah
    Easy money not always easy . Market always extracts it's price .
    Like 1
  • K shah @K shah
    Easy money not always easy . Market always extracts it's price .
    Like 1
  • NAGASEKHARA BABU @NAGASEKHARA BABU
    Right sir very good analysis give tomorrow nifty levels sir
    Like 0
  • sunilkumar tejwani @sunilkumar tejwani
    Right, yesterday bears ran for cover to recoup losses they squared off short position in C E and sold P E, now stuck from both ends
    Like 0
  • Raj Vegad @Raj Vegad
    Sir you are right..only hedge can give profit in either side..
    Like 0
  • Pratik Shah @Pratik Shah
    looks like its deliberately kept down for those who wanna short. wait for GDP nos at 5.30 n it might cut back 200 points loss or so. although v h e bought october puts of higher level but i doubt so much fall will come till tomorrow.
    Like 0
  • deepakcoach sharma @deepakcoach sharma
    Mr Aayush , you also play to the tune of SGX Nifty which is highly unpredictable and unreliable tool, their rollar coaster may bemuse many but not solid investors, pl work on sound principle .
    Like 1
    • Rahul Taneja @Rahul Taneja
      Totally agree with you , Sir. It's just a running commentary, no real analysis with any direction. Can't even handle criticism. You have my one organic 👍.
      Like 1
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