'Trust' in Rome probably took longer to build than Rome itself. So, surely building trust takes time. But there are some tangible and intangible factors that make people trust in a company or brand more than others. In the last decade, many brokers thought it was the geographical presence and went on a spree to set up branches around the country. Others doubled down on their banking/NBFC legacy, and yet others benefited from the goodwill created from industrial heritage or aggressive sponsorship spends. What do you think are the most important drivers of trust in our world of capital markets? Bring on your thoughts. What would make you trust a brokerage more? I'd love to discuss and debate with you.
Tejas Khoday FYERS Team4,121 Co-Founder & CEO, FYERS
New at learning some music. Pro at facing the music :-)
Status - I've been held up with the latest product developments, improving the customer experience over the last few weeks. Hence, I haven't been able to reply to many DMs. I will try to reply to you ASAP. Thanks for your patience. 👍
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Let's talk about Trust
Nifty 50 just turned 25 years old!
India's benchmark Index NIFTY 50 helped NSE shape India's capital markets. Here are some interesting insights about the index on its Silver Jubilee year:
- When it began in 1995, IT sector wasn't even included in Nifty 50. Now IT represents more than 17%.
- The banking sector was at 20% at the time. Now it is around 37%.
- Consumer Goods, Automobiles & Metals sectors have reduced by more than 50% over the years.
- There are only 12 companies that have remained in the Nifty 50 since inception and they are, RIL, HUL, Tata Motors, HDFC Bank, ITC, Tata Steel HDFC, SBI, Hindalco, ICICI, Bajaj Auto and L&T. The rest have been churned out of the index.
- Over the years, there have been 101 stock inclusions in the index (Approximately, 4 per year).
- The index has given roughly 14% in returns from 1999 to 2021.
- Nifty TR Index has given positive returns 17 out of 22 years. Out of this, only 4 years gave a return above 40%.
Was going through some stuff and thought I'd share it with you all. Wishing you all a very happy Holi!
Let's talk about Freak Trades
Of late, there have been several instances where options contracts have traded at prices far beyond what can be considered normal aberrations. Here are some reasons why freak trades can happen either in isolation or in any combinations:
- Lack of liquidity as there are many options contracts for each F&O stock/index.
- Stop Loss Triggering can be either incidental or caused by SL hunting by HFTs.
- Fat finger trades can happen. I'll post more about this soon.
- Panic square off can happen but usually on big market moves or event days.
- The absence of a pre-defined execution Range. TER helps prevent such moves.
Below are some recent freak trades on the recent "near-week" Index Options contracts:
- Nifty 16450PE on 20th August went from 100 to 803 levels in a jiffy.
- BankNifty 37100PE on 3rd September at 10:29 AM (Low at 343.9, High at 1921.8).
- BankNifty 36000PE on 7th September at 9:15 AM (Low at 48.45, High at 750).
- BankNifty 36400CE on 8th September at 9:15 AM (Low at 196.55, High at 900).
- BankNifty 36600PE on 8th September at 9:15 AM (Low at 135.1, High at 800).
Shallow markets tend to have spikes but due to their inability to absorb large volumes in a short timespan. Some have argued that it impacts price discovery but that argument doesn't hold much water as the prices normalize immediately after the freak trades. Also, freak trades happen at certain strike prices only. It's not as though all market participants are thrown completely out of whack to such an extent that the prices are irrational for the rest of the day across all options contracts. Nevertheless, it does affect traders & it's worth highlighting & discussing Freak Trades as they happen.
Steps to avoid freak trades:
- Use Limit Orders instead of Market Orders.
- Avoid placing stop losses at obvious price levels. Usually, most pending SLs are concentrated around significant price levels. It is better to place SL orders either above or below the most obvious price.
- Use SL-L with a broad range instead of SL-M. The max limit price in an SL-L will insulate you because, entering a pre-defined order execution range, trades beyond the range will be invalidated for your pending order.
- Avoid heavily concentrated positions in one contract. Instead, trade several contracts. The likelihood of freak trades happening in multiple scrips at the same time is minimal. This will further reduce its impact on your trading portfolio; if it ever occurs.
The floor is now open for discussions 👨🏽⚖️
Introducing Options Chain on FYERS Web
The Options Chain tool is implemented on FYERS Web! This was supposed to be done around the time when it was introduced on the app but It took us a little extra while to roll out this feature as some of our web developers were down with Covid. We thank & appreciate you for your patience.
Our Options Chain tool has the following features:
- You can access the Options Chain of any F&O symbol from the 'Right-Click Menu'.
- Select up to 30 strike prices above & below the LTP of the underlying symbol.
- You can choose to view/hide Strikes with Zero Volume & Open Interest (OI).
- View the underlying symbol's chart by clicking on the Chart Icon beside the symbol on the Options chain as shown below.
- You can BUY & SELL any options contract directly without adding them to your watchlist.
- You can also open the options contract chart by clicking on the chart icon.
- You can also unselect the volumes column (Be mindful of liquidity).
We hope you like this Options Chain. We're working on launching other options-related features soon. Stay tuned for more updates from us 👍
Futures contracts with <1 lac margins requirements (Reference for traders with less capital in 2021).
As you must know by now, as per SEBI's policies, intraday leverage will be removed completely by 1st September 2021. If you're a trader with less capital that mainly traded futures using margins provided by the broker and you're wondering how to cope with the upcoming change, here's a list of futures contracts on NSE, MCX that require less than 1 lac in initial margins (As per the latest near-month expiries):
Notice that all the above futures contracts are of currencies & commodities. Currencies have become more volatile during the pandemic and the low margin requirements certainly help take advantage of the price movements of INR and cross-currency pairs. Among the commodities that are mentioned, GoldM, Natural Gas, SilverM are amongst the most traded scrips by our clients. MCX index derivatives are easier to trade as they represent baskets of commodities (inherently diversified), cash-settled, and have relatively low margin requirements. There isn't much awareness about these indices, so if you want to learn more, watch our videos on BULLDEX & METLDEX. The newly introduced FINNIFTY futures contracts are also an exciting proposition for less capitalized futures traders in 2021 although it requires approximately 1.27 lacs. However, it is much lower than BankNifty and Nifty both of which need above 1.6 lac margins per lot. Trading stock futures is far fetched as the margin requirements are out of the league for most retail clients.
If you think the upfront margin collections are going to relegate you from futures trading altogether, you can perhaps consider trading ITM options (Buying). If this sounds new to you, read this answer. In short, ITM options have intrinsic value and require lower margins as compared to futures. If you are uncomfortable with options trading due to time decay (Theta), buying ITM is the closest it comes to futures because the delta is higher (The deeper ITM options are better because they move in line with the underlying prices, but you'll need to watch out for liquidity).
Note: We currently do provide intraday leverage as mentioned in our margin calculators. This is just a discussion point. The upfront margin collection is being implemented in a phased manner and intraday leverage will be completely eradicated in F&O by 1st September 2021.
FINNIFTY F&O brokerage will be ZERO till Feb End!
FINNIFTY F&O had a good start on Day 1. While NSE has waived off transaction charges for the index contracts for 6 months, we've waived off brokerage charges until Feb End. It's a nice kick-off but the first 3 months will be crucial to garnering sustainable volumes. I hope it results in the much-needed diversification in F&O volumes on NSE. Currently, BankNifty enjoys the lion's share.
Gold ETFs Vs Gold Stocks. Which is better?
Investing in gold is in high demand & has fortunately given positive returns in the long-term. Do you think it is better to invest in Gold ETFs OR Companies that have designed & operate business models to cater to the demand for gold? Here's a chart to showcase the 5-year returns - https://charts.fyers.in/c5ba8cf303c86d8a6479297d12384a94/4e7977fe772a63abc819642e6b821a18.png
What's your pick?
NSE waives off Transaction charges for Quarterly Options on Bank Nifty
NSE has announced the introduction of trading in Quarterly Options contracts on the Nifty Bank Index. To encourage active participation they've decided to waive off transaction charges on the trades done in Quarterly Options contracts on the Nifty Bank Index in the Future & Options segment of the Exchange from October 30, 2020, till March 31, 2021. Circular Ref. No: 12/2020
It'll mostly lead to the further consolidation of options trading volumes on Bank Nifty. Other indices are on the backburner?
METLDEX Trading Discussions
A dedicated space for discussing METLDEX. Index details, intraday levels, trading ideas, support & resistance, F&O contracts, Open interest, etc. After all, it is India's first Metal Index. Exchanging ideas, info, opinions only. Please make sure that you don't encourage any tips or unsolicited advice here. Let's keep it clean.
Note - MCX to launch it on 19th October 2020.
Descriptive VIdeo - iComDex Base Metals Index
BULLDEX Trading Discussions
A dedicated space for discussing BULLDEX. Index details, intraday levels, trading ideas, support & resistance, F&O contracts, Open interest, etc. After all, it is India's first Bullion Index. Exchanging ideas, info, opinions only. Please make sure that you don't encourage any tips or unsolicited advice here. Let's keep it clean.
To learn about the basics of BULLDEX, watch this descriptive video.