Time for investors to stick to stock-specific trading

Unnerved by fears of US recession, unwinding of yen carry trade, geopolitical tensions in Middle East, mixed quarterly earnings, status quo RBI policy outcome and unabated FII selling; the domestic stock market witnessed highly volatile week extending the fall for the second consecutive week.

BSE Sensex declined 1,276.04 points or 1.57 percent to close at 79,705.91 points, while NSE Nifty shed 350.2 points or 1.41 percent to finish at 24,367.50 points. The broader indices broke a two-week outperformance and ended lower, in line with main indices. The BSE Smallcap Index and the BSE Midcap index shed two per cent and one per cent, respectively.

Follow market trends and history. Don't speculate that this particular time will be any different.

For example, a major key to investing in a specific stock or bond fund is its performance over five years.

F&O/ SECTOR WATCH

Mirroring the hyper volatility triggered by global cues in the cash market, the derivatives segment also witnessed strong volume and price moves in several stock futures. With the Nifty shedding around 1.5 per cent and the Bank Nifty falling by over 1.5 per cent; fear and caution enveloped traders. In the option segment, Nifty options indicated significant Call open interest at the 25,000 and 24,400 strikes, while the substantial Put open interest was observed at the 24,300 and 24,000 strikes. As for the Bank Nifty, significant Call open interest is at the 50,500 and 51,000 strikes, while the highest Put open interest was seen at the 50,000 strikes. Implied volatility (IV) for Nifty’s call options settled at 14.82 per cent, while put options conclude at 15.67 per cent. The India VIX, a key market volatility indicator, closed the week at 16.60 per cent.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)