4th Oct 2024 — Nifty Slips 1130pts ~ 4.32%, stance bearish + BankNifty Postmortem & Weekly Analysis
Nifty Stance Bearish ️⬇️
What a dramatic week it has been, Nifty falls 1130pts ~ 4.32% after SEBI’s new FnO rule changes go live. What spooked the markets? I guess the fear that liquidity may get sucked out post 20th November 2024. Or is it because China’s stock market is going limit up?
The fall in our market was kind of different, usually the bear power lasts only 2 days after which the bulls will come in and rally the markets to new all time highs. Hope we get a bear run continuation for a while now, few of the stocks and the main indices in particular are overvalued. A retracement will shake off the greed and insanity.
Our stance has changed to bearish with the stop loss at 25247 above which we will go neutral.
BankNifty Stance Bearish ️⬇️
Banknifty also dropped 4.24% ~ 2280pts, the reversal signs were pretty clear last week and we did mention it in our weekly newsletter as well. There were 3 interesting moves this week.
- Gap down on 30th Sep
- Gap down on 3rd Oct
- Strong price action on 4th Oct
In fact, we fell almost 800 pts on 4th Oct after 12.30 pm, negating our retracement in the morning period. 51715 may act as a strong resistance and if we break through, I would like to change my stance back to neutral. Till then would prefer to go with a bearish stance.
On 1st October 2024, SEBI issued a new circular “Measures to Strengthen Equity Index Derivatives Framework for Increased Investor Protection and Market Stability”.
In this circular, they asked the exchanges to limit the weekly expiries to just one index. They also suggested increasing the contract size from Rs5 to 10 lakhs currently to Rs15 to 20 lakhs effective from 20th of November. SEBI also asked trading members (brokers) to increase the Initial Margin (IM) and Extreme Loss Margin (ELM) even for the option buyers, this would be effective from 1st February 2025. Finally, they decided to increase the ELM for short options contracts by 2% on Expiry day.
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