SEBI NEW F&O Rule " Pre Market Report Nifty & Bank Nifty 03 October 2024, Range, Prediction
Summary
TLDRThe video discusses recent changes introduced by SEBI on October 1, 2024, aimed at reducing speculation in F&O trading. Key updates include contract size increases, limits on weekly expiries, and margin rule adjustments. Some changes take effect in November 2024, while others will roll out in 2025. The presenter explains how these changes may impact traders, particularly impulsive ones, and speculates on potential shifts in trading patterns. The video also covers pre-market analysis for Nifty and Bank Nifty, market trends, and the influence of international events on the Indian market.
Takeaways
- 📢 SEBI introduced six new changes for F&O trading to reduce speculation, with some changes effective from November 2024, and others in 2025.
- 📅 Three rules will be implemented on November 20, 2024, two more in February 2025, and the final rule in April 2025.
- 💼 SEBI's major changes include stopping calendar spread margin benefits and brokers monitoring trade members four times a day starting April 2025.
- 💰 SEBI is increasing the contract size for options, with Nifty's lot size expected to rise from 25 to 75, effective November 20, 2024.
- 📉 Only one benchmark index weekly expiry per exchange will be allowed, with NSE likely to choose Bank Nifty, and BSE potentially opting for Sensex.
- 🔍 SEBI also plans to increase expiry day margin by 20%, which could impact traders, especially impulsive ones.
- 📝 Traders will still be able to trade existing November and December options, but no new ones can be opened after November 20, 2024.
- 📊 U.S. market conditions are affected by the Iran-Israel conflict, with major indices like Dow Jones, S&P 500, and NASDAQ all showing significant drops.
- 🌍 Global events, such as rising oil prices and U.S. private payroll data, are causing market uncertainty and influencing Indian market trends.
- 🚗 Auto sector stocks like Hero MotoCorp and Maruti Suzuki are gaining attention due to positive sales figures, while FMCG might be impacted by heavy rains.
Q & A
What are the key objectives behind SEBI's new changes in F&O trading rules?
-SEBI introduced new changes to reduce speculation in F&O trading. These changes include increasing contract sizes, limiting weekly expiries, and introducing stricter monitoring of traders exceeding their limits.
When will SEBI's six changes in F&O trading rules be implemented?
-Three changes will be effective from November 20, 2024, two from February 2025, and one from April 2025.
How will the new SEBI rules regarding upfront premium collection affect traders?
-The new rules will likely not affect the majority of traders but will impact impulsive traders. Upfront premium collection from buyers will be required, which could affect those who trade frequently without proper margin control.
What are the key changes in the F&O contract sizes effective from November 20, 2024?
-The option lot sizes will be increased from the current range of ₹5-10 lakh to ₹15-20 lakh. Bank Nifty’s lot size may increase from 25 to 30, and Nifty's lot size may increase from 25 to 75.
How will SEBI's changes to calendar spread margin benefits impact traders?
-SEBI will remove the calendar spread margin benefit, which is currently offered because of the low risk involved in calendar spreads. This will affect traders who rely on this benefit to reduce their margin requirements.
What will happen with weekly expiries under the new SEBI rules?
-SEBI will allow only one benchmark index weekly expiry per exchange. The presenter believes that NSE may opt for Bank Nifty as the weekly expiry and BSE may opt for Sensex to maintain competitive volume.
What are the present concerns with Nifty and Bank Nifty options under SEBI’s new rules?
-The presenter believes that Nifty, which consists of 50 stocks, and Bank Nifty, which consists of 12 stocks, may lead to speculation due to their limited stock base. This could increase market volatility.
How will the new SEBI rules affect traders who have open options positions before November 20, 2024?
-Traders will be able to continue trading existing options positions or those opened before November 20, 2024, but no new options can be opened under the old contract sizes after this date.
What is the expected impact of the Middle East conflict on the stock market?
-The escalation between Iran and Israel has caused significant negative sentiment in the U.S. markets, leading to declines in major indices and an increase in oil prices. This is expected to impact Indian markets as well.
What technical levels are critical for Nifty and Bank Nifty according to the video?
-For Nifty, the critical support is at 25,650, and resistance is at 26,000. For Bank Nifty, the support is at 52,600, and resistance is at 53,250. The presenter expects weak sentiment to persist if these levels are not breached.
Outlines
📊 SEBI's New F&O Rules and Market Impact on October 1st, 2024
The video begins by discussing six new rules introduced by SEBI regarding F&O trading, which aim to reduce speculation. Three rules will take effect on November 20, 2024, two in February 2025, and one in April 2025. Key changes include adjustments to contract sizes, removal of calendar spread margin benefits, and increased trade monitoring. The speaker believes these changes will not significantly impact most traders but may affect impulsive ones. The November changes in contract sizes, particularly for Nifty and Bank Nifty, are highlighted, along with concerns about SEBI's decision to allow only one benchmark index weekly expiry per exchange.
📉 U.S. Market Decline and Its Impact on Indian Stock Market
The U.S. market experienced a sharp decline on Tuesday, driven by escalating tensions between Iran and Israel. The Dow Jones fell by 4%, S&P by 93%, and NASDAQ by 1.53%. Additionally, the VIX spiked by 15%, reflecting heightened market nervousness. Private payroll data released showed job growth, but the market remained flat due to geopolitical concerns. The Indian market reacted negatively, with Gift Nifty closing significantly lower. FMCG and auto sectors are highlighted as areas of focus, especially with expected rain and sales figures from companies like Hero MotoCorp and Maruti Suzuki. Institutional activity showed heavy selling by FIIs.
📈 Technical Analysis of Nifty and Bank Nifty Amid Sell-off
The video wraps up by analyzing the technical performance of Nifty and Bank Nifty. After a sell-off on Monday, Nifty displayed range-bound movement on Tuesday, forming a 'doji' pattern and showing a continuation of negative momentum indicators. The speaker expects weak market sentiment with 25,650 acting as support and potential upward movement if Nifty breaks 26,000. Bank Nifty also faced pressure, closing below 53,000 and showing a bullish candle pattern. The resistance and support levels for both indices are further detailed based on weekly options data, with expectations of resistance at 26,000 and support at 25,600.
Mindmap
Keywords
💡SEBI
💡F&O trading
💡Contract size
💡Benchmark index
💡Margin benefit
💡Impulsive traders
💡Weekly expiry
💡Nifty and Bank Nifty
💡Option writing
💡Premium collection
Highlights
SEBI released six new changes related to F&O trading to reduce speculation on October 1st.
Three of the six changes will be effective from November 20th, 2024, two from February 2025, and one from April 2025.
From April 2025, brokerages are required to monitor every trade member four times a day to ensure they are not exceeding their trade limits.
From November 20th, the contract size of options will increase, with Nifty's lot size expected to increase to 75 from the current 25, and Bank Nifty's lot size increasing to 30 from 25.
SEBI will allow only one benchmark index weekly expiry per exchange, which is expected to temporarily reduce option volumes.
The expectation is that NSE will opt for Bank Nifty as its weekly benchmark due to its higher trading volume, while BSE might choose Sensex.
Removal of calendar spread margin benefits will be implemented in February 2025, affecting traders who use this strategy.
The upfront premium collection from buyers will be implemented in February 2025, but it is not expected to impact the majority of traders.
Effective from November 20th, the maximum option contract value will be raised to 15-20 lakh rupees from the current 5-10 lakh rupees.
Changes in contract size and benchmark expiry rules are expected to cause a temporary reduction in trading volume, but it is likely to increase again over time.
The current market reaction is expected to be negative due to recent escalations in the Middle East conflict and SEBI's new F&O rules.
Recent global events, such as the Iran-Israel conflict, have caused significant drops in major U.S. indices like the Dow Jones, S&P 500, and NASDAQ.
Increased volatility in the global markets is reflected by a 15% spike in the VIX index.
U.S. markets saw neutral outcomes after the release of the September payroll data, which showed 143,000 jobs added against an expectation of 124,000.
FMCG stocks will be in focus due to expectations of above-average rainfall in October, impacting companies like Dabur, which anticipates mid-single-digit revenue contraction.
Auto sector stocks are expected to be active, with Hero MotoCorp reporting a 21% YoY sales increase and Maruti Suzuki showing a 2% rise.
Transcripts
hello everyone not on the se's board
meeting day but on the next day I mean
on October 1st sebi released the six
changes related to f&o trading to reduce
the speculation so in this video Let's
see those first and then we'll discuss
about our regular premarket report for
today 3rd October 2024 for the near
shock market in terms of nifty and Bank
Nifty first of all if anyone fancy
reading the sebi circular please have a
go I will attach the link in the
description as well as in the pin
comment now regarding the changes there
are six if required please pause and
have a look out of six three will be
effective from November 20 then two will
be effective from February 2025 and one
rule will be effective from April 2025
here the new rules that are going to
implement from February and April 2025
won't affect majority of the people
since those are just upfront premium
collection from buyers and then removal
of calendar spread margin benefit I mean
at present for the calendar spread
because the risk is very low the
brokerages are offering better margin
that margin benefit SEI asking the
Brokers to stop it then from April 2025
onwards sebi requested The Brokerage to
monitor every trade member four times in
a day to see whether they are exceeding
their trade limit or not kind of and if
they found anyone exceeding the limit
then and there itself Brokers has to
limit the members trading I personally
think all those won't affect most of the
Traders but do affect the impulsive
Traders now coming to November 20th
implementation items the bigger one is
changes in the contract size as per the
present rule the option lot size should
be between 5 lakh Rupees to 10 lakh
Rupees this rule was set back in 2015
when Nifty was trading between 6,000
points to 8,000 points so now sebi said
they're increasing the lot size to 15
lakh to 20 lakh rupees hence as per the
new rule maybe Bank Nifty loot size
might increase up to 30 from the present
25 level not a much of the big change
but for Nifty it expects to increase
around 75 from the present level 25 so
that's the first implementation change
that will be effective from 20th
November then the next important one
they said they will allow only one
Benchmark index weekly expiry per
exchange this rule is the SE Hall of
Fame rule they genuinely think that this
will curve and reduce the option volume
but honestly I think this might
temporarily curb in the volume but it
will again increase in no time let me
explain why at present 90% of the option
trade volume is happening in the NSE and
the remaining 10% is on BSE in that NSE
Bank Nifty trade volume will be roughly
around 45% and nifty's trade volume will
be 35% just for info both nsse and BC
are not government owned BC is is the
one listed company whereas NSC Stock
Exchange is privately owned hence both
of them will look for becoming
profitable so my guess is nsse Will opt
for Bank Nifty as their weekly Benchmark
expiry over Nifty since its option lot
size doesn't change much and also it got
the high trading volume on the other
hand I expect BC will opt for SX over
the bankx as a strategic move in this
way those who traded in Nifty will move
to sensex and I mean Nifty is made up of
50 number of stocks even that we were
suspecting big players were manipulating
that now SX is only 30 number of stocks
and in Bank Nifty case it's even worse
only made up of 12 number of stocks and
it's based on one sector think about the
amount of speculation it can cause like
NPA problem it had back in 2019 to 2020
period and also at present most people
familiar with Nifty price action now if
you want to get familiar with s SE means
I suspect we need at least one year to
understand its price M anyway I know
always people criticize me whenever I
talk about sebi but it is what it is
honestly I think this will make the
traders to lose more but if I'm wrong
happy to be then the final one they
increased the exper day margin by 20% so
these are the three changes that will be
effective from November 20th now the
question coming to everyone's mind what
happens to my existing November or
December options open interest can I
trade it after as far as I know the
existing options or the options opened
or going to open before nober 20 we can
able to trade it can be bought or sold
however we just can't open the new one
from November 20 and so far now neither
nsse nor BC gave their comment regarding
which Benchmark they're going to choose
for weekly options trading we can expect
the answer either this week or next week
so those are all my takes regarding the
se's new fno rules now let's look at our
regular pre-market staff about us Market
because there was an escalation between
Iran and Israel on Tuesday US market
closed substantially negative Dow Jones
was down 4% S&P down 93% and NASDAQ
decreased 1.53% on top of that vix
increased 15% and crossed 19 then last
night before the market opening ADP
private payroll data released the
September month new jobs data after four
straight months of below expectation
value last month data exceeds the
expectation I mean 1ak 143,000 jobs
added against expectation of 1ak 124,000
this number I won't say it's positive
but more of a neutral number and present
Market is very nervous about conflict
escalation in the Middle East so last
night US market closed flat all major
IND index Dow Jones S&P 500 and Nasdaq
all closed less than. 1% change compared
to Tuesday night closing basically
Tuesday drop still has to reflect on the
Indian market in line with that
yesterday morning gift Nifty dropped
significantly and closed at 25,800
equating that with the spot Market it's
indicating the gap down of over 100
points then regarding IND ADR as it is
everything closed mild negative and
little bit more negative on Tuesday
night so if you calculate the Arbitrage
means ICC Bank infosis HDFC bank and
Reliance gdr all indicating the negative
Arbitrage of around 1.5 to 2% only Vio
got not much of the difference hence
overall both sector indicating a
negative trade moving on this Middle
East conflict also increased the oil
price by near 2% at the time of this
video Doud crude closed at71 us per
barrel and Bren crude closed at75 us per
bar Barrel so those were the things
happened on the dollar market now coming
to new Indian stock related first fmcg
will be on Focus since meteorological
Department released the Press statement
that they expect above average rain in
October and in addition Dober mentioned
in their quarterly update because of
heavy rain they're expecting their
revenue to contract mid single digit
which is not good then second some auto
companies released the sales figure hero
motop sales increased 20 1% year-over
year marua Suzuki increased near 2% so
we can expect Auto sector also will be
on Focus finally about institution last
Tuesday also FIA was Mega sellers after
Monday the net sold for 5,600 rupes and
as usual da supported the market by net
buying for 4,600 CR rupes then in
derivative Market the net sold almost
everywhere it looks like they are
hedging as a summary two days combined
us Market down significantly in line
with that gift Nifty and IND are all
indicating the negative trade today in
addition Market will be reacting to this
new f&o rules so all those stock market
business related stocks also will be on
Focus about the things should look out
during our Market hours around 1: to 2
p.m. Europe and UK's PMI data is due and
in the aftermarket hours for us their
service payment data and usual weekly
job insurance claims are some of the
items we need to keep an eye out today
coming to technical after a complete
sell off on Monday then on Tuesday Nifty
opened positive but was in the rangeb
movement throughout the session thus on
the daily chart Nifty formed the doe
pattern with a continuation of lower
high and lower low formation and with a
negative crossover in the RSI momentum
indicator which all indicate the
negative sign so as long as Nifty
remains below
25,900 we can expect the weak sentiment
and I expect 25650 to act as a support
level and a bridge above 26,000 could
signal upward movement in the near
future then in case of Bank Nifty it
opened 130 points gap down and closed
below 53,000 Mark thus extended its fall
for the third day thus on the daily
chart Bank formed a small bullish
scandles pattern with a long upper
Shadow indicating selling pressure at
higher level however it managed to
defend the 21-day exper moving average
support 52,600 and on the higher side
53250 is the upper resistance regarding
the weekly options data the maximum call
option open was at 26,000 strike
followed by 26,500 and 26,200 with
maximum new call option writing at
26,500 strike followed by 25,800 and
25,900 on the put side the maximum open
address was at 25,000 strike followed by
25,800 and 25,600 with maximum new put
option writing at 25,000 strike followed
by 25,600 and 24,800 there from options
data 26,000 is the immediate resistance
with support at
25,600 so that's all in this video hope
you all got SM information please
consider subscribing the channel and
liking the video so it will help me beat
the YouTube algorithm and also motivate
me to do more please don't make any
investation based on this as not as he
advisor I'm doing this for me and
viewers educational purpose only thanks
for watching
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