Weekend Investing Daily Byte – 9 July 2024

July 9, 2024 5 min read

The market continued on an upward trajectory. Today’s discussion is on FNO trading. There are some new murmurs from SEBI’s committee. We’ll talk about it. Is the game over for retail FNO trading?

Market Overview

Where are the markets headed? Nifty made a new all-time high, closing at 24,433. After some nervousness over the past two days, the market came back very strongly, up nearly half a percent today. The juggernaut continues to roll forward, seemingly unaffected by anything right now.

Nifty Next 50

Nifty Junior was also up another half a percent, gapped up, closed the gap down, came back up, and closed nearly half a percent up.

Nifty Mid and Small Cap

Nifty mid-caps remained sideways from yesterday’s open. The last four or five sessions have been good, so some consolidation is happening here. Mid-caps are not moving as much as large caps have been, and similarly for small caps, about a quarter percent gain, with the daily candles just about sideways for the last three sessions.

Nifty Bank Overview

Bank Nifty was dull and consolidating again, up a quarter percent, but the last ten or twelve sessions have been in the same range. The initial push two weeks ago from private banks is no longer the driving force there.

Nifty Heatmap

Specific pockets like yesterday’s railway stocks are moving. Today, autos were moving, indicating specific sector changes. Bank Nifty was dull and consolidating again, up a quarter percent, but the last ten or twelve sessions have been in the same range. The initial push two weeks ago from private banks is no longer the driving force there. Every sector is now keenly awaiting the budget, which is less than 13 or 14 days away, and then quarterly numbers will start to roll in next month. These are the two triggers going forward.

In the auto space, there was a good buzz today with Maruti, Mahindra, Tata Motors, and Hero Motors. FMCG also showed positive movement with Britannia and ITC, and some pharma names were also going up. Banks were mostly silent except for ICICI Bank, and Reliance was down a bit. No other major movers within the Nifty space.

In the Nifty Next 50 space, rail stocks that were running very hard yesterday took a break today. RBNL, IRFC, IRCTC, and RailTel were all down. Public sector enterprise stocks were also softer. Bosch, Havel, Siemens, ABB, and Matherson gained some ground. Adani Power and LIC also gained after a long while, and Zomato and Indigo saw some gains for the day.

Sectoral Overview

Sectoral trends showed autos leading the pack with a 2.2% gain today. Despite only a 3.2% gain for the month, 2.2% of that came today itself, showing a significant move. Pharma also did well with a 1.6% gain today and a 5.5% gain this month. PSU banks came back after a while with a 1.3% gain today. The entire monthly gain of 0.7% was exceeded today. On a three-month basis, PSU banks have not done well, so this could be a turning point for them. Consumption stocks were up 1.2%, and real estate also showed gains after many days, with the entire week’s gain virtually coming today. FMCG has been doing well with a 4.4% gain this week. IT stocks lost some ground along with energy, but IT stocks have done very well over the last month, almost the second-best sector behind public sector enterprise stocks. Energy stocks have also done well over the past month but took a break today.

Sectors of the Day

Nifty Pharma Index

Pharma is one of the best charts right now, with post-election volatility breaking out of long-term resistance, retesting, and then flying very high. The pharma index is doing extremely well.

Nifty Auto Index

The auto index, after a brief correction in mid-June, has now started to go back up and should challenge the previous high in the coming sessions with a 2.23% gain

Stocks of the Day


In the stock spotlight, Maruti gained 6.6% today. It almost came into this resistance band around 13,000 on news that Uttar Pradesh has abolished the registration tax on hybrid vehicles, benefiting Maruti’s popular hybrid models. This is a positive sign as states compete for business. If other states follow UP’s lead, this could boost hybrid vehicle sales significantly.

Story of the Day

Is it game over for retail FNO trading?

The SEBI committee panel set up to study the FNO markets and recommend strategies to improve investor confidence and protection has given some proposals. There are concerns from SEBI and RBI about risks associated with retail investors in the FNO markets and market volatility. SEBI says there is anecdotal evidence that people are borrowing money to place speculative bets in the FNO segment, with household savings going into such risky bets, and that 90% of people entering the FNO markets lose capital or at least some money.

Nifty options volume has been dramatically increasing over the last two or three years, leading to an options frenzy in India. The compounded annual growth rate of options contracts traded in India is baffling the entire world. Daily turnover in the equity derivatives market has exploded in India, raising concerns globally about what is happening in India.

Some proposals under consideration include increasing the minimum lot size of derivative contracts from about 5 lakhs to 20 to 30 lakhs, restricting weekly options to only one expiry per stock, limiting the number of strike prices for options contracts, collecting options premium from buyers (which is already happening), intraday monitoring of position limits, and increasing margin requirements closer to expiry. These proposals aim to direct household savings towards investments rather than speculative trading.

While these proposals may seem draconian, they are in the initial stages. SEBI will issue a consultation paper for public comments, allowing traders and investors to share their views. It’s crucial for those affected to participate in this process to ensure their voices are heard. The sentiment from SEBI’s new leadership indicates a positive shift towards communication and public participation.

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    Weekend Investing Daily Byte – 9 July 2024