HUGE Volatility? Post Market Report 31-Oct-23

Post Market Report: Analyzing Market Volatility and Its Impact

Welcome to the post market report sponsored by Delta Exchange. In today’s report, we will discuss the high volatility in the markets and its implications for traders. We will also explore the advantages of trading in the US markets compared to the Indian market. Additionally, we will touch upon the current market conditions and the factors contributing to the volatility. Let’s dive in!

Market Volatility: A Challenge for Intraday Traders

Today, the markets witnessed significant volatility, making it challenging for intraday players to make profits. Many traders incurred substantial losses, prompting them to consider trading in the US markets instead. While the US markets are also volatile, the premiums are higher, and trading strategies developed for the Indian market may not yield the same results. This has led to a shift in trading systems and the introduction of new workshop content to cater to the US market.

For those who are interested, there are limited seats available for the upcoming workshops in Delhi and Mumbai. Subscribe now to secure your spot!

Understanding Market Movements

The Indian markets have been experiencing extreme volatility, with Bank Nifty witnessing sharp fluctuations. Intraday, the index can move up to 1,000 to 1,500 points, making trading incredibly challenging. Despite the low activity from institutional investors, the markets remain highly volatile. The primary reason for this volatility is the low trading volume, which allows even small buying or selling activities to have a significant impact on the market.

Global cues have been relatively positive, with European markets opening in the green and US futures gradually turning positive. However, it is worth noting that the broader markets have performed better than the index. Certain stocks, such as Reliance, HDFC Bank, ICICI Bank, TCS, and Infosys, have a significant influence on the market. Manipulation in the pre-market can create false impressions, leading to sudden market movements upon opening.

Options Market and Future Predictions

Looking at the open interest, it appears that the market is likely to trade within a range of 19,000 to 19,200. The highest open interest among put options is at 19,000, while the highest open interest among call options is at 19,200. Option sellers have been facing challenges due to higher volatility, which has led to increased premiums. Put premiums shoot up when the market crashes, while call premiums rise during market recoveries. This trend indicates that it may take some time for the markets to stabilize.

Key global events, such as the Fed meeting, Apple results, and US jobs data, are expected to impact the market in the coming days. Additionally, the festival season is approaching, but even auto stocks are not performing well. Despite the usual trend of increased market activity ahead of the festival season, this October has proven to be particularly difficult.

Market Outlook and Election Year Speculations

October has historically been a challenging month for the market, with only two out of the past eleven years experiencing a decline. Interestingly, the last decline occurred in 2018, which was also the year before the Parliament election. Conflicting reports suggest that the market could either surge by 133% or crash by 25% depending on the election outcome. However, it is important to consider these statements with caution, as they come with certain conditions and uncertainties.

As an experienced trader, I advise against selling put options during an election year. Instead, focus on call options or call ratios. Regardless of the election outcome, the market is likely to rise, with the possibility of a significant decline being low. However, it is crucial to monitor political developments closely.

Frequently Asked Questions

1. Is trading in the US markets more profitable than trading in the Indian market?

While the US markets offer higher premiums and potentially easier trading conditions, it is essential to adapt trading strategies to the specific market. What works in the Indian market may not yield the same results in the US market. It is advisable to attend workshops or seek guidance from experienced traders to navigate the US markets effectively.

2. How can low trading volume impact market volatility?

Low trading volume allows even small buying or selling activities to have a significant impact on the market. This can lead to increased volatility, making it challenging for traders to predict market movements accurately. It is crucial to consider trading volume as a key factor when analyzing market conditions.

3. What are the key events to watch out for in the coming days?

Important events to monitor include the Fed meeting, Apple results, and US jobs data. These events can influence market sentiment and potentially lead to increased volatility. Stay updated with the latest news and market developments to make informed trading decisions.

4. How does the festival season impact the market?

Traditionally, the festival season brings increased market activity, especially in the auto sector. However, this year has been challenging for auto stocks, indicating a deviation from the usual trend. It is important to closely monitor market conditions and adjust trading strategies accordingly during the festival season.

Conclusion

Market volatility continues to pose challenges for traders, with the Indian market experiencing significant fluctuations. Exploring opportunities in the US markets may be a viable option for those seeking higher premiums and potentially easier trading conditions. However, it is crucial to adapt trading strategies to the specific market. Stay informed about global events and political developments to make informed trading decisions. Despite the difficulties faced in October, it is still possible to achieve profitable trades with the right approach and strategy.