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The new margin rules for hedged future and options trades coming into effect from 01-June-20 reduced the margin required. It is very good for retail traders, as it reduces the unlimited risk of naked trading.

Here is a detailed very technical explanation by NSE – National Stock Exchange of India Ltd., on the reduced margin framework from 01-June-20:
https://www.theoptioncourse.com/NSE-New-Margin-Framework-01-June-20.pdf

Well, the above file will be a bit complicated to understand. I will try to explain in simple language. read more

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If you do not know on Monday, 20-Apr-20, in the US, Crude Oil FUTURES fell below $0 a barrel to -$40. Yes MINUS $40. So basically the sellers of Crude Oil futures had to become buyers (closing the trades), to get delivery of Crude Oil. So the buyers were actually paying the sellers, to get their hands off the stock they have to keep in their stores, in the US. 

What do ‘negative prices’ mean?

You see, oil is produced and kept in stores. This involves cost. Oil producers and sellers make a profit only when it is sold at a higher level than all costs, including such as producing, transporting, storing and labour. Unfortunately, there are no buyers in such a market when the US went on a complete lock-down. So even storing was getting difficult and costly. read more

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Before reading let me tell you, do not look stock markets for minute to minute or hour to hour for any analysis. This article has a view for the short term – which means anywhere from 2 to 6 months.

I hope you must have heard the news of Rs. 20 Lakh Crore Special Economic Package in Indian economy by our PM Mr.Modi on 12-May-20.

If you do not know read this:
https://economictimes.indiatimes.com/news/politics-and-nation/pm-narendra-modi-address-live-centre-announces-an-economic-package-of-rs-20-lakh-crore/articleshow/75699154.cms read more

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Today May 04, 2020 India VIX has surged 26.42% with a huge fall in NSE.

And here is graph of NSE today (May 04, 2020 at 11.06 am):

Why have I written this article? Just to tell time and again that India VIX is inversely proportional to Indian Stock Markets.

I have written a detailed post here that Nifty and India VIX are inversely proportional.

Why you should see India VIX before taking a trade?

You can gauge the fear factor in the markets. If India VIX has risen anything over 10% then that day is a dangerous day to trade. You have to trade with caution. read more

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Date of post: 06-Apr-20

Since last few days, India VIX is dropping. See this image:

India VIX 03-Apr-20

From a high of 86.63 to 55.30 in less than 30 days.

What does it mean?

It means that traders are assuming that the worst has happened and some kind of normalcy may resume in a few days so fear factor is decreasing.

Does this guarantee that normal trading will resume soon and that Nifty will now start to go up?

Well, nothing is guaranteed in stock markets else everyone would put 100% of what they earn in stock markets. But this gives some indication that in the near future (30 to 60 days) normalcy will resume. read more

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Date of article: 23-Mar-2020

Let me first show you last 6 months graph of NSE:

Source: https://money.rediff.com/index.html

On 14-Jan-20, NSE closed at 12362.30, and on 23-Mar-2020 at 12.30 pm it was trading at 7713.80. During this period it has hit two lower circuits. So basically in just last 70 days it has gown down by -37.60%. That is almost 40% of wealth eroded from stock markets in just 70 days.

Where has this money gone? Back to investors bank account. Next time when you hear from media that thousands of crores of investors wealth is lost then do not think that everyone lost money. Fact is even during normal times someone makes and someone loses. Here the story is slightly different. read more

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Date of Article: Friday, 28-February-2020

Do not worry over this huge fall in Indian stock markets:

Source: https://money.rediff.com/index.html

India VIX has also shot up by 30.73% – above 20 is dangerous for derivative trading:

Source: https://www.moneycontrol.com/indian-indices/india-vix-36.html

Why This Happened?

It is due to the fear of coronavirus, the markets world over are going through a bad phase.

You can track real-time reported cases of coronavirus all over the world here:
https://infographics.channelnewsasia.com/covid-19/map.html read more

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From 1st of May 2020, the margin required to trade will change as per SEBI Circular SEBI/HO/MRD2/DCAP/CIR/P/2020/27, Dated: February 24, 2020.

Link here: https://www.sebi.gov.in/legal/circulars/feb-2020/review-of-margin-framework-for-cash-and-derivatives-segments-except-for-commodity-derivatives-segment-_46058.html

Here is a snapshot:

Cash market (intraday) – NO CHANGE in margins.

Option Buy (Naked or Hedged) – NO CHANGE in margins.

Option Sell (Naked) – NOT MUCH CHANGE in margins for Index, but for stocks, the margin will increase. read more

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This is copy of email sent to my newsletter subscribers on Feb 26, 2020:

There are many reasons why nifty has become so volatile now-a-days:

1. Too much confusion on CoronaVirus – lots of myth that China is hiding total death count is believed by many people.

2. US-India trade – United States did not announce a trade deal during US President Trump India visit in Feb 2020, not even a mini-deal. Basically, Trump came to just see India – kind of travel with family nothing else.

3. Indian Economics, especially the mid and small scale industries are in tatters and hope is very far. I do not see Nifty crossing 12500 soon. On 26-Feb-2020 Nifty closed at near 11,678. read more

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Union Budget 2020 will be presented in the Parliament on February 1, 2020, at 11 am. Till then there will be huge volatility in India markets.

Here are some pointers that can help you make a decision to trade:

1. INDIA VIX will keep increasing

https://www.moneycontrol.com/indian-indices/india-vix-36.html

Currently, INDIA VIX on Jan 17, 2020, is at 11:14 am is at 14.28, up by 0.10 points or 0.71% from the previous close.

It will keep increasing until February 1, 2020. After that it will start to drop. It will take about 10 days for India VIX to be back to normal. Which means by 10-Feb-20 it will be back to normal. read more

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