Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Navigating Volatility Ahead of Final Election Results

1 min read

As the Indian market approaches the final election results on June 4, 2024, volatility has been a key feature of market behavior. This period is crucial for investors and market participants, as it brings heightened uncertainty and potential for significant market movements. Let’s get into the current state of volatility and explore the expectations for the market trends in the short and medium term.

Understanding the Current Volatility

The Surge in Volatility

In the weeks leading up to the election results, the India VIX Index, a key indicator of market volatility, experienced a significant surge. This rise can be attributed to several factors:

  • Political Uncertainty: Elections are inherently uncertain events that can lead to changes in government policies, impacting economic conditions and investor sentiment.
  • Economic Performance: The Indian economy’s strong performance, with a 7.8% growth in Q4 FY 2024, surpassing analyst expectations, has also contributed to market fluctuations. This robust economic data can lead to increased market activity as investors adjust their positions based on new information.

Nifty 06th Jun 2024 – ATM Short Straddle

The breakeven points of weekly ATM straddle are at 22,619 on the downside and 23,881 on the upside. I am expecting the price to potentially reach the upper breakeven level of 23,800+ INR, indicating a bullish outlook or at least significant upward movement for this weekly expiry. Usually when volatility is there it could break any of the straddle direction

Volatility Collapse

Following the initial surge, the India VIX Index showed a sharp drop, a phenomenon known as “volatility collapse.” This occurs as the market begins to price in the potential outcomes of the election, reducing some of the uncertainty that previously fueled volatility. Despite this collapse, the current levels of the VIX suggest that there is still enough volatility to impact market movements significantly.

Market Expectations

Short-Term Trend: Up

Given the current economic indicators and market sentiment, the short-term trend for the market appears to be upward. The strong GDP growth and the overall positive outlook for the Indian economy are likely to continue supporting this trend. Investors seem to be optimistic about the economic policies and their potential impact on corporate profits and market conditions.

Nifty Futures Hourly Charts

Medium-Term Trend: Up

Looking beyond the immediate aftermath of the election results, the medium-term trend also appears to be upward. The fundamental strength of the Indian economy, as evidenced by the impressive GDP growth figures, suggests a resilient market capable of sustaining an upward trajectory. Moreover, the ongoing reforms and policy measures aimed at boosting economic growth are likely to further bolster market confidence and drive sustained growth.

As we approach the final election results, the market is characterized by significant volatility, driven by political uncertainty and strong economic performance. Despite the recent volatility collapse, the market is expected to continue its upward trend in both the short and medium term. Investors and market participants should stay informed and vigilant as the election results unfold, as these outcomes will play a crucial role in shaping market movements in the coming days and weeks.

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Political Shocks and Market Crashes: Lessons from Argentina for…

In an unexpected turn of events, the Indian stock market experienced a dramatic crash today following the announcement of the Lok Sabha election results....
Rajandran R
1 min read

State of Nifty Options and ATM Straddle ahead of…

Exit polls suggest a strong performance by the NDA, with seat predictions ranging from 358 to 400, compared to 353 in the 2019 results....
Rajandran R
2 min read

Hourly Trend Exhaustion in Nifty Futures Ahead of May…

As we approach the crucial date of June 4th, 2024, when the election results are expected, the stock market is exhibiting significant signs of...
Rajandran R
1 min read

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More