Where is the Volatility? this is the question you would be asking yourself if you are a frequent short term trader in this market. Recent market movements are filled with choppiness/whipsaw and compressed in a very tight narrow range. Trading opportunities are often very less in this kind of environment unless the India VIX moves above 18.
Recently, Indian govt announced a particular scheme in their budget notes which took a lot of attention, especially gold merchants and speculators. With gold prices tumbling since last couple of years, the new scheme-if it works, would not only increase the supply of precious metal at domestic level, in-turn cuts our international gold imports which further depresses the price at global scale.
Government spending policies that influence macroeconomic conditions. Through fiscal policy, regulators attempt to improve unemployment rates, control inflation, stabilize business cycles and influence interest rates in an effort to control the economy. Fiscal policy is largely based on the ideas of British economist John Maynard Keynes (1883–1946), who believed governments could change economic performance by adjusting tax rates and government spending.
If you are a regular reader of my articles, then you know “I hate technical indicators”. They are a derivative of price action, nothing more than a mathematical complex paralysis. My clients frequently question me-“Hey do you use any indicator”? Most probably my reply will be no-because majority of you guys know, I am a pure Price action trader!
This week is expiry for derivative markets with dried up volatility and Nifty spot managed to close above 7900 on weekly basis for the very first time .India’s Q2 GDP data and Fiscal Deficit data(Macro Economic data) scheduled during this week on August 29. So far FII’s had more close to Rs 98,802 crore this year in bond market compared to Rs 76,705 crore in equity market.
Nifty fell on late wednesday and banking stocks led the decline.The Bank Nifty fell 1.9% as yields on bonds rose, heightening concerns over the lenders’ debt holdings. Banking stocks such as ICICI Bank, State Bank of India (SBI), Punjab National Bank, Bank of India, Axis Bank and Canara Bank are down 2% each. IDBI is the top looser and lost more that 6%. It should be noted that Reserve bank of India on Tuesday cuts banks’ statutory liquidity ratio by 50 bps to 22.00 pct of deposits from August 9 and leaves repo rate unchanged at 8 percent
Statistical principles and tools as used in Black -Scholes assumptions which remains corner stone of risk management world wide from petty traders to large hedge funds and wall street banks may not really be so robust bull work against risk of seismic proportions as so often touted. In the era of Algos and high frequency trading ,outliers and black swans are too common ,wide spread and frequent than formerly assumed and threaten to wipe out trading accounts in few seconds
Recently India VIX had returned from the peak volatility of 36 during 28th august down to sub 20 levels.Now very low volatility is prevailing in our Indian markets. Trend followers, traditionally benefit from increasing volatility while other strategy player experience losses. History reveals movement from low volatility to higher volatility produces outsized trend following returns.
Learn various psychological factors leading to stock market volatility with Kotak Securities. Many investors indulge in the trading activity of the stock market. Their characteristics, thoughts, and psychological beliefs arethe major factors determining the way share prices progress. For that reason, it is important to develop a deeper understanding of human psychology when assessing share market investment opportunities.