Hi, this is Amol Bonde, and welcome to the post-market report. Yesterday, Nifty opened slightly higher but quickly came under selling pressure. On Friday night, HDFC Bank ADR increased by nearly 2.86 percent, leading people to expect a good performance from HDFC Bank. However, while HDFC Bank rose, other heavyweight banks like ICICI Bank, Kotak Bank, Axis Bank, and State Bank all fell. The Bank Nifty was under pressure throughout the morning. In contrast, the mid-cap index was up by more than 0.75 percent.
It’s evident that selling is primarily happening among the heavyweight stocks, while the broader markets are performing well. Later, when the European market opened, HDFC Bank also faced selling pressure, causing Bank Nifty to decline by more than 500 points from its intraday high. Bank Nifty has been exhibiting such volatile trading behavior for the past two weeks. It has been fluctuating between 43,500 and 44,500 points. Last Thursday, it broke the lower end of the range at 43,500 and dropped by another 100 points before recovering more than 600 points the following day.
This kind of volatile movement is similar to what we witnessed last month when Nifty traded violently between 18,000 and 18,500 points. It experienced a 200-point decline over two days, followed by a 200-point increase over the next two days, and so on. Currently, we are observing a similar pattern between 18,500 and 19,000 points. On Friday, Nifty surged by more than 200 points from its intraday low to high, but today it has fallen by more than 150 points from its intraday high to low.
Despite the market’s volatility, it’s worth noting that the weekly range of 18,500 to 19,000 points and the monthly range of 18,000 to 19,000 points are still being respected. Today, my friend informed me that both FPIs (Foreign Portfolio Investors) and DIIs (Domestic Institutional Investors) were net sellers. Last Friday, they were net buyers. This inconsistency leads to confusion among investors. Tomorrow, FPIs might consider DIIs as sellers and vice versa, potentially causing both of them to end up as buyers. We’ll see if this logic holds true.
Institutional selling has been a significant factor contributing to market volatility. However, when it comes to institutions, they primarily sell heavyweight stocks like Axis Bank, Kotak Bank, and ICICI Bank, while HDFC Bank and HDFC manage to close slightly positive. Looking at the open interest data, we can see aggressive selling of 18,800 put options, while there has been a significant addition of call options for 18,800, 18,850, 18,900, and 19,000 strike prices. It’s puzzling how weekly option sellers consistently lose money. Selling options with a longer time frame, such as one and a half to two months, is advisable to balance the effects of time decay and gamma.
Today, even the Reliance index experienced selling pressure. We hope for the opposite to happen tomorrow, but since the U.S. markets are closed, our market’s opening will depend on how the Asian markets perform. There is unlikely to be a significant gap up or down. With that said, many options have been sold, and I maintain my view that the range of 18,500 to 19,000 points will hold. This morning, I was slightly more bullish and considered upgrading my view to 18,700 to 19,200, but now I’m back to 18,500 to 19,000. We will discuss the rest of the details tomorrow