What to Expect on Expiry Day ? NIFTY update on Oct 3rd, 2024

 Market Update - Correction or Downtrend?

NIFTY was down by 2% during the last 3 trading sessions after it hit an all-time high. On the previous trading day, NIFTY closed at 25796. PCR and OI data show significant bearish sentiments towards the market.

PCR stood at 0.6706.

Max Call contracts are written at 25900.26000 levels which could act as potential Resistance levels and Max Put contracts are seen at 25700 levels and may act as a strong support.

Option Interest Data Oct 3rd, 2024

By analyzing the above data, the outlook towards NIFTY is BEARISH and may fall towards the preferred correction position.

How Price Levels Behaving ?

NIFTY was in a long bull run for the last few weeks and has seen all-time highs multiple times. When analyzing the day chart, it can be seen that the forward strength of NIFTY is decreasing significantly and it indicates that the fall extends till it reaches the 20 SMA Line. See the image below.

NIFTY 1-Day Chart

In lower time frames, it can be observed that NIFTY was falling until it reached a support level of 25750 and was seen consolidating at that level. If it can break that level of strong support it may further take support at the 25500 level which the 20 SMA stands. 

Be cautious about the further fall until it takes a strong support level at 25500. For the next trading session be prepared to execute your trades according to this.

SEBI's Circular Dated. 01-10-2024

Yesterday, SEBI issued a new circular to Strengthen the Equity Index Derivatives Framework for Increased Investor Protection and Market Stability. What are the main points discussed in that? I am not explaining the whole thing in detail. But rather include the key points that may go to affect you as a retail trader.

• You will have to maintain the upfront premium in your account while entering the trade. This will reduce the extra leveraging you prefer.
• If you are trading on expiry days and have positions across different expiry dates, you will need to account for higher margins. Ie, If you have an Rs. 50000 capital and you're used to getting margin relief from a calendar spreads, that relief will no longer apply on expiry day contracts expiring that day.
• Your open positions will be monitored randomly throughout the trading day. That means if your position exceeds the allowed limits of NIFTY derivatives, you could be penalized even if you correct the position later.
• The lot size will increase as the contract size increases. It will increase up to 3 times at least.
• You will only have one option contract within a weekly expiry to choose from. This could potentially reduce your choices.
• If you are involved in trading strategies that include short options, you'll need to ensure that you have enough margin to cover an additional 2% requirement on expiry days.

I have only included the main points of that circular for those who a traders within a capital range of 50000 to 1 Lakh. If you need any detailed explanation of this matter, Please mention it in that in comments.

Read my previous article here .