Street signs: Stocks in 'overbought' zone, trading portals, and more

Stocks in ‘overbought’ zone

Following a 14 per cent jump in April, the markets have entered ‘overbought’ territory. According to derivatives analysts, the Nifty is expected to see downward pressure. Already, traders are a worried lot following a sharp drop in the SGX Nifty on Friday, when the domestic markets were shut for a holiday. The put-call ratio has climbed to an elevated level of 1.9, which is a negative sign, say experts. On the positive side, open interest (OI) at the start of the May series was at a record low of 9.6 million. Experts say low OI could help cap the downside as it means the outstanding long positions are fewer. Also, the India VIX has cooled off from 86 in March to below 34. Analysts say the Nifty trading range for May will be 9,000 and 10,000.

Sundar Sethuraman

Mid-cap rollovers may backfire

Traders are carrying forward their positions on certain mid-cap stocks after strong gains in April. Analysts say the likely volatility in the May series could catch these traders on the wrong foot. "Traders are expecting to gain from the positional trades on mid-cap stocks, as the market had shown stability after heavy sell-off seen in March," said an analyst. Stocks, such as Biocon, M&M Finance, Cipla, and Indraprastha Gas recorded high open interest at the start of the May series. These stocks have gained 16-22 per cent in the past month. "With the SGX Nifty showing weakness, traders will be forced to unwind positions," added an analyst.

Jash Kriplani

Phishing attacks on trading portals

Some brokers have reported instances of phishing attacks, whereby fake sites are created with identical URL and login page of a brokerage in order to obtain login-in details of the user. Later using the account details, scamsters try to execute trades in illiquid securities. “First, phishers buy long-out-of-the-money option contracts at negligible prices. Later, they buy the same contracts at a higher price through unauthorised logins, thus making profits,” said a broker. Sources say brokers have drawn the attention of the market regulator, Sebi, of such practices. Also, some brokers have barred purchases of illiquid contracts and penny stocks as a precautionary measure.

Samie Modak