Profit booking was seen on February 19 after the markets rose for three straight days.
Thirteen of the 16 major sectors logged losses. The broader small-caps and mid-caps fell 0.51% and 0.9%, respectively.
Both the Nifty and Sensex gained about 1.4% in the previous three sessions, supported by December-quarter earnings that broadly met expectations despite a one-time hit of labour code-related charges.
“Participation remains stock specific, indicating cautious deployment of capital,” said Aakash Shah, technical research analyst at Choice Broking.
“While overall sentiment remains positive due to improving earnings, consolidation is likely to persist in the near-term,” Shah added.
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I believe its a speculative fall. As today was Sensex expiry.
Sellers got into trouble as puts that were written got in the money situation.
If u look there was actually no increase in volume across stocks and indices.
Which might be an indication of a speculative fall.
I think market would gain back all those lost point in coming days.
There already seems to be a island(blue). I think @Funancee is predicting an another island(orange). If it opens gap down with no retracement back into the gap, it may signal bearish reversal.
Both these statements seem to be contradicting each other. If option sellers had to sell(who won’t be playing stocks outside expiry), why didn’t the volume increase?
Also why did it become so bad in the first place that writers had to sell?
I might be wrong. But here goes my understanding.
When the price goes in the money for put sellers they sell FUTURES to mitigate the loss.
Or it can also be because large option sellers are Delta hedged.
This creates futures and spot to go down. Its a loop and can create a spectacular fall.
Regardless of the reason… be it market manipulation or something else, once a clear support level is breached or there’s a spectacular fall, it creates mental anchoring to that price level. It’ll be hard to reclaim previous territory. I’m also expecting a bounce, but only to short.
