The story of the day revolves around the weekly options ending, with discussions and rumors about potential actions from SEBI (Securities and Exchange Board of India). SEBI has hinted at possible changes, and data suggests some imminent action.
Market Overview
Nifty opened with a slight gap up and reached nearly 24,200 before falling back and closing at -0.14%. This marked the fifth consecutive day of upward movement in the market. Over the last two sessions, there was an expectation of a mild correction, which materialized towards the end of the week. Investors tend to avoid keeping extended positions open over the weekend, leading to some nervousness and profit-taking, especially among those who have been long in the past few days, particularly in leveraged positions.
Short sellers who had expected the market to turn down on June 4th were disappointed as the market climbed 3000 points since then.
Nifty Next 50
Nifty Junior increased by 0.26%, showing insipid performance
Nifty Mid and Small Cap
The Mid Cap Index was slightly in the green, closing at a new high of 20,800, up by 0.5%. Small Caps also increased by 0.6%, remaining within the same range for the last seven or eight sessions.
Nifty Bank Overview
Nifty Bank lost about 0.9% after a stretch over the last 15 days, with HDFC Bank, ICICI Bank, Axis Bank, and Kotak Bank leading the decline.
FIIS and DIIS
Foreign Institutional Investors (FIIs), who initially held large short positions, have shifted to long positions. This shift has created a burden on the market, leading to profit-taking every time it becomes stretched.
Nifty Heatmap
In the telecom and oil sectors, Bharti Airtel dropped 2.15% despite recent gains. The debate between Trump and Biden had an immediate impact on market perceptions, favoring Trump, which might lead to increases in oil and commodity prices due to potential geopolitical instability. Contrary to forecasts predicting a drop to $60, oil prices have been rising.
Reliance was the sole large-cap leader with Jio increasing plan prices by 20%, a move that received mixed reactions but aligned with typical business strategies. ONGC also saw a rise of 2.5%.
Sectoral Overview
The consumption, FMCG, and pharma sectors were largely flat. Capital goods declined, with Madharsan down 4% and Siemens, ABB, and Bosche also seeing declines. Public sector enterprises had a muted performance. The real estate sector led with significant gains over the month and the past twelve months.
Sectors of the Day
Nifty Oil & Gas Index
The oil and gas sector showed robust performance, indicating potential for significant future moves.
Stocks of the Day
CDSL
In stock spotlight, CDSL gained nearly 19%, hitting a new all-time high due to the announcement of a bonus issue on July 2. Gold remained flat at 0.16%.
Gold Chart
Gold remained flat at 0.16%.
Story of the Day
Regarding weekly options and SEBI’s potential actions, there are concerns about the high percentage (90%) of retail investors losing money in derivatives. Exchanges offer various expiry settlements, creating a highly speculative environment similar to a casino. Household savings are shifting into speculative trading rather than capital formation, with premium turnover surging from 4.5 lakh crore to 140 lakh crore. Overall derivatives turnover has increased dramatically, with individual participation rising from 2% to 41% in six years.
International attention is also focused on India’s options contract growth rate, which outpaces the rest of the world. Indian options market turnover is matching that of the S&P 500, raising concerns given the difference in market depth.
Potential SEBI actions include the possible removal or restriction of some derivative products, an increase in taxation on derivatives trading, and a significant increase in margin requirements to curb excessive leverage and trading volumes, ensuring better market integrity.
Options traders are encouraged to comment and share their views to influence SEBI’s decisions. Public feedback can impact advisory committees’ recommendations.
