New Delhi, Kishore Ostwal. Nifty had reached a level of around 12,000 on Tuesday. However, he fell to the level of 11,650 points due to three reasons. Fear of renewed lockdown in Europe, threat of war by China, and core rumors of Mukesh Ambani being admitted to a London hospital were cited as factors. Let us analyze how markets are broken by such rumors.
We told you that due to calls and puts, there is a business of 50,000 to 1 lakh crore rupees at the time of every expiry. When the call goes up and Nifty continues to rise, people choose the call and buy the call with premium. The reason for this is that due to very high margins people are not able to go to the futures market. Because of this, traders show their inclination towards the options market.
Imagine the cost they are incurring. When the Nifty was at 11,712 level, 11,700 calls were being traded at a premium of Rs 140. This means that if the trader wants to make money on a call of 11,700, his premium will reach Rs 140 to Rs 180 and he will gain Rs 40 if the Nifty goes above the 11,800 mark level.
Now let’s see this thing that if the Nifty does not reach the level of 11,800 points in four days, then the premium of Rs 140 becomes zero. Each series is shown interest in at least 7 million shares. This means that the premium of Rs 100 crore in a series goes into the pocket of those who create fluctuations. They create a very volatile environment for this. In this case, it becomes like Kasino, where 99 out of 100 contestants lose and only one person wins. If you drive the market or are very fortunate then only you get success in it. This is the only reason why the market sees a lot of ups and downs.
Let us now analyze other factors:
Lockdown is an issue associated with sentiment in Europe. At the same time, if we talk about India, it is moving towards full unlock. The recovery rate in India is around 85 percent. On the other hand, the total number of active cases has been reduced to around eight lakh. In such a situation, the lockdown of Europe is not very important. Now look at the interrelation. On Wednesday, European markets were down by just one percent to 1.4 percent, but the Indian market fell more than 2.5 percent. It was not proportional. It was completely linked to the weekly expiry of the Nifty. This decline was seen within an hour. At the same time, the day before, the market had seen a lot of momentum.
Threats from China are now a daily thing and like the issue of North Korea, the market does not matter much anymore.
Now Mukesh talks about Ambani’s health. This rumor was spread through social media and WhatsApp. It emerged as the most prominent factor in panic and fear in the market. RIL shares were down by three to four per cent, with a weightage of around 16 per cent. It was actually the dirtiest game played to break the market. Mainly due to this rumor, Indian markets were broken up to 2.5 percent.
However, if these aspects were so serious, the market would not have risen by 350 points on Friday. As such, we reach the logical conclusion that these gains and declines are made only to derive the benefits associated with the weekly expiry. Earlier, there used to be expiry on a month, so there were less fluctuations. you have no choice. In time to come, you may have seen daily expiry on Nifty. The biggest thing is that it is unethical to create turmoil by spreading rumors about one’s health.