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Time: 12.45
Mid Market Report:
- Markets are consolidating as expected.
- Ahead of RBI policy, traders will not create huge positions.
- VIX has shot up by more than 15%.
- This is due to RBI policy.
- Once RBI policy is over, VIX is likely to come down.
- VIX has crossed 21 today.
- Europe has opened positive.
- US futures are also positive.
- As usual defensives are declining and cyclicals are moving up.
- Nifty future is likely to settle down between 6700 and 6780.
Comments
Be cautious, IndiaVix intermediate trend has turned UP. Everyone expects 6800-6900-7000 +++ ... The most performing index which took Nifty beyond multi-year trading range is threatening to post Lower Highs and Lower Lows. Will have to wait and watch whether the broader index nosedive or continue to march northwards. CNX PSU Banks near Resistance.
ReplyDeleteAs I have mentioned earlier, Technical analysts concentrate only on levels, which may be good for medium term and long term investors. For options, levels is important only 25%. Remaining are the time value, event risks, volatility value etc. There are only 15 more trading sessions this months as two trading sessions are over and there are 3 public holidays. Bank Nifty is trading around 12800. Bank Nifty 14400 Call is trading at Rs 32, giving 8% return for your investment of Rs 10000 span margin. Where else you can make money with so little risk?. If I have to loose, then Bank Nifty has to rise by more than 1600 points in 15 trading sessions. Even if it rises, we always do delta hedging and make profit. This is the power of options. More over somebody has Rs 20000 to 50000, can buy options, somebody having Rs 1 Lakh to 5 Lakhs can buy futures, what about people have one crore? Can they buy options, so that the entire one one crore will be wiped out if the view is wrong? Can they buy futures, so that MTM losses can be 10 lahs or more if the view is wrong? But in my system any amount of money can be invested and we neither go long nor go short, we do both and try to make money through the time value and volatility value. So stock market is just like a sea, where some people go to the shore, see the sea enjoy and come back, some people just wet the legs, some people bath, some people go for scuba diving, some people live by fishing, some make do business by deep sea fishing, some people operate ships and make big corporates, some people go for cruise shipping, some people who go for fishing aim for small fishes, some people for big fishes, etc. So no one particular formula or investment or return works. Everyone's objective is different, investment level is different, risk taking ability is different, knowledge of the market is different. One of my friends is a strong believer of technicals, nothing wrong. But he just believes technicals, he does not look at anything else. As you have mentioned, in addition to technical levels, look at the VIX, event risks, open interest, global cues, etc. Most important thing, it is easy to make money in a bear market, (no matter whether you go long or short), it is difficult to make money in bull market. Markets will follow techicals most of the time in a bear market, but not in bull market. This is my view, most people may not agree. According to a study 95% of the retail people lost money in the stock market during 2005-2007, which a was huge bull market. So my driving point is that you technical peoples, please look at other factors also. Agree to the fact that it is not easy to make money in stock market, if so, everybody will be here, learning technicals is not more difficult than studying B.Tech, MBBS or MBA. The fact is that majority of the technical people loose money in the market.
DeleteSir, I never ever follow technicals blindly. My only caution to those who take one sided position. The reason why IndiaVIX rose y'day was due to the fact DII's bought OTM puts, they might have bought OTM puts of 6400-6500 to buy in cash market, and hence they hedged by buying OTM puts. They are likely to place buy orders near 6480-6630 lvls. FII's might SELL for few days so that they can buy at higher levels to take the index beyond 7000+ .... irrespective of election results we are likely to fall in May (could be 2-5 days after the election outcome).
DeleteI am sorry to disagree with you. DIIs are not allowed to buy naked Put options. They are allowed to buy or sell options only to the extent of their base portfolio in order to hedge. That is why you do not get the data for F&O by DIIs, but you get the same data everyday for FIIs. FIIs are allowed to create positions in F&O.
DeleteAshwin Sir, You said, you will be doing Paper trade on my suggestions to buy 6700 CE @ 60-65 and Shorting 6400 CE in the range of 350-400 ...
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