Stock markets could see high volatility on monthly F&O expiry; 6 things to know before opening bell

Sensex and Nifty could be looking at a troubled Thursday with Nifty futures on Singapore Exchange trading over 120 points lower. Benchmark indices enter today’s trading session on the back of a five day losing streak. S&P BSE Sensex  now sits at 37,668 points while the 50-stock Nifty has slipped below the 11,150 mark. Global cues look weak with equity markets in North America ending in the red yesterday and Asian peers slipping during the early trade. Analysts expect volatility, which is now at 21 levels, to remain high on Thursday aided by the scheduled derivatives expiry of September month contracts.

Global cues: Dow Jones slipped yet again and NASDAQ plunged over 3%. To add to this, Asian stock markets were deep in the red on Thursday morning. Shanghai Composite was 0.89% down while Hang Seng slipped over 1%. Japanese stock markets too were in the red accompanied by KOSPI and KOSDAQ. 

FII and DII flows: Foreign Institutional Investors (FII) pulled away Rs 3,912 crore from domestic stocks on Wednesday with equity markets falling further. On the other hand, Domestic Institutional Investors (DII) were again net buyers, pumping in Rs 1,629 crore into equities.

Bulk and Block deals: In the secondary markets, Tata Sons Private Limited was seen picking up stocks of Tata Chemicals and Tata Motors – DVR Ordinary. Over 22 lakh shares of Tata Chemicals were bought while over 37 lakh shares of Tata Motors – DVR Ordinary were picked up. 

IPO watch: At the end of the bidding process, Chemcon Speciality Chemicals IPO was subscribed 148.94 times by investors while CAMS IPO was subscribed 46.93 times. Today is the final day to bid for Angel Broking’s IPO, which has already been subscribed 146% by investors. 

Monthly expiry: Analysts are advising caution for today being the monthly derivative expiry. “We expect volatility to remain high on Thursday as well, thanks to the scheduled derivatives expiry of September month contracts. Indications are in the favour of some respite but sustainability would be key,” said Ajit Mishra, VP – Research, Religare Broking.

Expert take: “Going forward, the market would continue to consolidate in the near term as investors keep a  close watch on the rising Covid cases and delay in US stimulus. Technically too, till Nifty sustains below 11250 zones, bounce could be sold for further weakness towards 11000 while on the upside medium term hurdle is shifting lower to 11350. Cool down in volatility even after weakness in the market indicates that some sort of range bound move along with capped upside could be seen for next coming sessions,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal.