Street Signs: Sebi's F&O standoff, charting Nifty's course, and more

Sebi’s F&O standoff: Balancing speculation risks

The market regulator, Securities and Exchange Board of India (Sebi), is proceeding cautiously in allowing the entry of new stocks into the derivatives segment due to concerns surrounding excessive speculative activity. According to market players, the last batch of companies permitted to enter the futures and options (F&O) market was over two years ago, in January 2022. Despite meeting most eligibility criteria, several large companies such as Zomato, Avenue Supermarts, and Jio Financial Services are still not allowed to trade in the F&O segment. Consequently, these stocks also become ineligible for inclusion in the benchmark National Stock Exchange Nifty index. To be part of the Nifty index, a stock must compulsorily trade in derivatives. Market observers believe that the stalemate will need to end soon, as these companies cannot be kept out of the index for too long.

Charting Nifty’s course: 22,700 in sight

Market players anticipate that the positive momentum in the market, fuelled by better-than-expected domestic gross domestic product growth and softening US inflation data, will propel the benchmark National Stock Exchange Nifty beyond the 22,700 level. The 50-share benchmark index closed at a new record high of 22,378 after Saturday’s special trading session, marking its third straight weekly gain. “The Nifty is resuming its bullish momentum after a two-month consolidation period. The immediate target level is 22,500, while 22,750 is the next target level. On the downside, 22,200–22,000 will now act as a strong demand zone,” says Santosh Meena, head of research at Swastika Investmart.

IPO buzz: Moderate GMP signals market prudence

The three initial public offerings (IPOs) that entered the market this week are commanding moderate grey market premiums (GMPs) ranging between 20 per cent and 30 per cent. Among them, Gopal Snacks (issue size: Rs 650 crore) has the highest GMP of 30 per cent, while RK Swamy (Rs 424 crore) and JG Chemicals (Rs 252 crore) are at approximately 20 per cent each. For the three IPOs that hit the market last week, GMPs ranged between 50 per cent and 110 per cent. Market players said that profit-taking in smallcaps, coupled with cautionary measures by market regulator Securities and Exchange Board of India, has helped temper expectations.