People are buying shares because prices are rising, and prices are rising because people are buying. This explains the current trend largely as the market has managed to take the Evergrande crisis, the global energy crisis, chip shortages and rising crude prices in its stride.
“Valuations are outrageous, but right now the bigger risk lies in being outside the market rather than out of the market, the way stock prices have brushed off negative news,” says Old Monk, a seasoned trader-investor. Despite the flexibility, most people remain dissatisfied. “Those who have invested are angry that all other stocks except their portfolios are rising, and those who haven’t invested are buoyed.” think every investor is rolling in the money,” he says.
self-fulfilling prophecy
After a disastrous August for IPOs, many wondered as high net worth individuals (HNIs) would make a choice about which issues they would apply for. But the easy availability of funds and peculiar blockbuster listings have eroded the memory. An HNI can subscribe to Rs 100 crore worth of shares in an IPO with his Rs 1 crore penny, due to the long queue of NBFCs eager to lend. Big bidding, like the one seen in Paras, gives an impression of huge demand, and triggers a buy on the listing. Given the membership numbers, institutions and retail investors were not very enthusiastic about the issue, but HNIs were in spite of the expensive valuations. Leading the action in the stock on Friday was said to be a low-key but highly influential Mumbai-based HNI with a passion for cricket.
In the short term, Paras – as the name implies in Hindi – could help pass off some junk IPOs as gold.
Meri Aawaz Suno
At the end of June this year, fund managers at domestic fund houses and Portfolio Management Service (PMS) firms were taken aback when they received an invitation to call with Abbott India Management. That’s because in the past, such calls with a company like Halley’s Comet have been rare. The call was not an interactive one; Participants were in ‘listen only’ mode. Top officials answered ‘as many questions as possible’, all of which were ‘received in advance’.
Fund managers seem to have influenced the meeting, as the stock has consistently outperformed the pharma index by a large margin since then. Two months after the analyst call, the NSE announced that it was adding 8 securities to its futures and options (F&O) list with effect from October 1, among them Abbott. And while the stock may have ticked the relevant boxes for inclusion on the holiday list, many expressed surprise at the option given that the daily volume in the stock is mostly between 10,000-20,000 shares. Lower the liquidity in the stock, it is easier for some vested interests to control the move in the derivatives segment.
The week leading up to October saw some sharp ups and downs in Abbott India. One fund house is said to have dumped an appropriately sized lot, sending the stock into a tailspin. But it quickly turned around, as some HNIs, who were waiting, swooped in and swooped in.
Smart strategy, not a fat finger
Option traders are noticing a strange trend in the weekly Bank Nifty contracts. On the day of expiration, when the index is falling, there is a sudden demand for deeper out-of-the-money call options, thereby increasing the premium for those contracts. A similar discrepancy is observed when the index is rising on the day of expiry; There is a huge demand for deep out-of-the-money put options. Ideally, the premium for such deep OTM contracts should fall on the day of expiry and otherwise, there is no point in going for such contracts when the market is moving in the opposite direction.
Initially, these swings were thought to be the result of rough finger trades or novice traders who had no understanding of how options worked. But it turns out that some smart traders are using this strategy to free up a portion of their margin funds locked in the exchange. The logic here is that it helps to limit the effective price at risk if prices move unfavourably, as Deep OTM trade sets a limit or limits. Of course, there is a cost to buying deep OTM contracts. But if free margin can be used to trade more profitable, then ‘why not’? Some traders say
III and the Rise of Celebrity Operators
You must have heard of foreign institutional investors (FIIs) and domestic institutional investors (DIIs). But the category that is currently fueling the rally in mid- and small-cap stocks is the III-individual ‘Insta’-gram investors, as some in the market would like to call them. This group can be seen circulating on social media platforms—especially Twitter and Instagram—following many market gurus and pundits in hopes of some market knowledge/tips that can help them make some immediate profits. Huh. This is prompting many companies to seek the services of market gurus to back their stocks. The modus operandi goes something like this: The celebrity buys a large amount of stock and announces it on social media. This will immediately bring the IIIs up to speed. The promoter will reduce the loss, if any, and the celebrity gets to keep the upside. What’s in it for the promoters? They benefit from an increase in the stock price because they play a lot of volume with the help of traditional market operators.
Not FOMO, but FONO
Until a few months ago, the Fear of Missing Out (FOMO) was prompting many retail investors to invest in equities and mutual funds, even though they had little or no understanding of what they were doing. Fixed deposit rates are now at rock bottom, another factor that has many people desperate for stock market action. And that feeling can be called phono – despair at the prosperity of neighbors. The other day, Jay, a small business owner in his early 40s who works from the same co-working space as this diarist, is making new highs in the market every day.
“I want to invest in stocks,” he told me.
When asked why:
“My friends, who do not know the A’s of the stock market, have made a lot of money from the market in a short span of time. I wonder what is wrong with me. Why can’t I make money like them?”
A couple things here. One, everyone looks smart when the market is moving to one side. The real picture will emerge only after the bull run is over. Two, your neighbors/friends/relatives will only brag about their winning trades. Only a few would be honest who would talk about their loss.
(Edit: Abhishek Jha)
read all breaking news, breaking news And coronavirus news Here. follow us on Facebook, Twitter And Wire.
.