Street signs: Nifty's next pit stop, grey market premiums decline, and more

Nifty’s next pit stop: 20,300?
 

The benchmark National Stock Exchange Nifty50 has posted gains in 13 of the past 15 trading sessions. During this period, the index added 927 points, or 4.8 per cent, to close at 20,192. Technical analysts are of the view that the market is now in an overbought zone, but they don’t rule out a further ascent. “The larger texture of the market is bullish; the market is in temporary overbought conditions, and hence we could see some profit booking at higher levels. For short-term traders, 20,075 and 20,000 would act as key support zones, while 20,300 to 20,375 could act as crucial resistance areas for the bulls,” said Amol Athawale, vice-president, technical research, Kotak Securities.
 

Grey market premiums decline amid IPO pile-up
 

The grey market premiums (GMPs) for the latest crop of initial public offerings (IPOs), including SAMHI Hotels and Zaggle Prepaid Ocean Services, are hovering in the single digits. By comparison, the GMPs for most IPOs in August were over 50 per cent. Market players said the bunching up of half a dozen offerings and last week’s sell-off in small and midcap stocks are weighing on sentiment. On Tuesday, the NSE Midcap 100 and Nifty Smallcap 100 logged their biggest declines since December. The stocks, however, managed to stabilise over the next few sessions. Another factor at play is the liquidity crunch. Bankers say that as all the IPOs are coming to the market together, investors are not able to mobilise large funds to place high wagers.
 

Freaky Friday trades: BSE releases advisory 
 

On September 8, BSE’s equity derivatives segment witnessed unusual trades, with the price of the S&P BSE Sensex call option contract with a strike price of 67,000 shooting up nearly 50 times from ~4 to ~200. Market players said the freak trade led to losses for certain traders. Following the incident, BSE has issued an advisory seeking more caution and due diligence from trading members (TMs). “Erroneous orders affect the equilibrium of the market besides causing losses to investors. In view of the safety of TMs and clients and also maintaining the normalcy of the market, TMs are once again called upon to immediately review stop-loss order limit and market price protection limit settings in their system both at the TM and user level,” BSE has said. Experts warn small investors to avoid option writing, as such freak trades can potentially lead to huge losses.