Volume 3000 Crores -- Market Networth up 4 Lakh crore !
Sensex has made a historic move today with a triple circuit by closing almost 2100 points up.
First
time ever trading was halted for a whole day because of an up move of
more then the specified circuit limit levels based on quarterly closing
which is at 975/1460/1950 + respectively. Sensex ended up 2110 points
up.
The upmove has really surprised everyone
of the street including me but for us its been a pleasant surprise as
have been on stock specific longs and more the merrier.
Many
would be creditting this move to the LEFT OUT feeling but data suggests
it might be a SHORT OUT system issue which can be a lil serious.
Lets go through certain statistical facts and observations:
--
> All previous Sensex /Nifty circuits were down circuits aided by
margin selling or external news. Volumes were always equal or more then
the 2 week average qty. We never saw it hit the circuit limit 3rd time.
--
> This is the fastest time in which markets hit a circuit since the
down circuit on p-note issue but it recovered by end of day. Total
trading time was less then 2 minutes in the double halt today.
---
> Generally circuits are seen mainly due to either margin selling or
an external event impact. P-note , Sub prime Dow Jones , Elections were
numerous issues.
--- > The current up-move
can be attributed to short covering and one of the most disturbing fact
is the entire move on NSE has been through only 3000 crores. This
implies the amount of shorts in the system have still not been covered
and will be left scrambling to do the same tomorrow.
---
> In todays rise was so quick in seconds that BSE/NSE systems
failed to put a freeze on the 1st circuit limit and the indices inched
up to the 15% limit. Indices got a 2 hour halt together.
--
> As per derivatives data and market-men there is a huge amount of
short build-up in Nifty futures and Calls of 3800 to 4200 series in
Nifty have been written heavily. Some of this might be hedging and
strategy positions which need to be covered desperately. Lot many
brokers are into margin issues from clients with short positions. Will
it be opposite of the MARGIN SELLING in earlier falls and we would see
MARGIN BUYING in derivatives. Will not attribute any further buying to
left out feeling. All in all the huge shorts still in the system and
need to be covered for some normalcy in the index.
--
> Statistically its a classical short squeeze as SHORTS as even
after a 17 % move the huge shorts in the system have got no chance to
cover. Panic Buying by FII Hedge Funds , HNIs and other participants
would be seen in the opening bell.
-- > As
per statistics Domestic institutional investors /MFs and mainly
Insurance companies have been the big buyers whereas FIIs were left
out. Hope to see LIC and others coming out to sell to bring normalcy in
the market.
-- > If this
doesnt happen MARGIN BUYING by brokers , Panic buying by FIIs /MFs to
increase allocations can wreck havoc in the system on opening bell.
Hope SEBI and Exchanges need not intervene with differential ckt limits
or time halts.
Somehow all this points to a
safe booking route for investors who bought at lower levels.
14.5k/15.8k levels are one of the best to get out of over-run stocks
book half or more of holdings.
This is just a personal view which may not be well -researched but exploring the current facts.
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Best Regards,
Nooresh
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