The Big DAY to Remember

ramkasi

Active member
#1
25 - OCT -2017

Today PUNJAB NATIONAL BANK UP Almost 50% in a single day. I think a feat never happened in Indian market history.


i was planning to buy 1000 shares at the opening for intraday, but after seeing a gap-up of 15% and no time to watch closely I decided to stay away. One more wrong decision from my side.:damnmate: :banghead: :hmmmm: :banghead:

Also a new high for our markets.
 

Alchemist

Administrator
Staff member
#2
The shorts in PSU banks were butchered. Each and every short position must have lost at least Rs 1 lac.

I had short futures position too, but in Bharat Financial. :D.

I usually don't trade in futures and even when I do, very rarely I carry positions overnight.

I really don't know why I didn't close my position yesterday. Something inside me told me not to close the position and take the risk.

The banks may go up again tomorrow as many shorts won't be able to provide the required margins.

I have sold an Oct SBI 340 call. I will cover it tomorrow first thing in the morning.
 
#3
The shorts in PSU banks were butchered. Each and every short position must have lost at least Rs 1 lac.

I had short futures position too, but in Bharat Financial. :D.

I usually don't trade in futures and even when I do, very rarely I carry positions overnight.

I really don't know why I didn't close my position yesterday. Something inside me told me not to close the position and take the risk.

The banks may go up again tomorrow as many shorts won't be able to provide the required margins.

I have sold an Oct SBI 340 call. I will cover it tomorrow first thing in the morning.
Ouch, call moved up significantly today. In case if I am not asking too much, why you have shorted BharatFin?
 

Alchemist

Administrator
Staff member
#4
Ouch, call moved up significantly today. In case if I am not asking too much, why you have shorted BharatFin?
The call was written today and there is hardly an MTM loss at the moment.

I had shorted Bharat Financial because I felt Indusind Bank was breaking down. Indusind is much bigger than Bharat Financial and thus from now on, Bharat Financial's stock will follow Indusind's stock till the two merge.

I had shorted yesterday and the position was closed today. I just have just one short call position now.

--------------------------------

Another important point:

Today shorts in PSU banks have made huge losses.

The aggregate loses on the short side are mammoth and many clients will default.

Just to give a small example.

The open interest in SBI futures at the EOD yesterday was 6.32 crore shares in October series and 3.98 crore shares in November series.

The two contracts traded at an average price at 309 and 312 today.

If we assume the average loss per share to be Rs 55, total losses will be over Rs 550 crore.

Total losses across all bank stocks, all instruments (options included) and all series will be much higher.

Usually margins are adequate to cover such losses, but the move today was exceptionally big. Initial/SPAN margins won't have covered the loses.

If many clients default, it will create problems for brokers.

Most large brokers will be able to absorb losses from clients' defaults easily.

My only concern is what is the situation with the discount brokers. Majority of large traders trade with discount brokers and hence the losses will also be concentrated there. I have significantly large cash margin with RKSV and am thinking of transferring it to my bank account for a week or two - just as a cautionary measure.
 

Alchemist

Administrator
Staff member
#5
My total margin blocked for 340 SBI call is 1.65 lac.

If SBI opens 25% up tomorrow i.e. at Rs 406.15, my MTM loss will be 406.15-340 = Rs 66.15 per share or Rs 198450 per 3000 share lot. My margin won't cover the loss.

That must have happened with many clients today as the stocks jumped 20% or more on opening.
 

Alchemist

Administrator
Staff member
#6
The amount of losses not covered by margins will be much smaller than the margins. Also most clients whose positions were closed out today, will prefer to pay up rather than get their accounts frozen.

I think I don't need to withdraw my margin.

Defaults are a more serious problem is the cash market where many brokers often finance their clients and at times proper margins are not maintained.
 

ramkasi

Active member
#7
My total margin blocked for 340 SBI call is 1.65 lac.

If SBI opens 25% up tomorrow i.e. at Rs 406.15, .

sachinjee is there more steam left like another 20% in a single day :bawling:

Last week I was looking at pnb, sbi to buy some quantity, again a deep correction thought has put me away to buy. I was looking at 129 SL for pnb:stupido:

Last year in November I suffered by the bjp decision of demonetization bcoz large exposure to HFC's booked heavy losses, repco etc.
Yesterday lost few thousands again because of exposure to hfc's :stickyman:

I am looking f/w for BJP to bring black money back and pay 15 lakhs to each poor mans account :dontknow:.
 
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Alchemist

Administrator
Staff member
#8
sachinjee is there more steam left like another 20% in a single day :bawling:?
I don't know.

All PSU banks saw strong delivery buying. Some more buying may be seen in next few trading sessions.

In some PSU banks like SBI, the open interest has gone down significantly and futures are at a discount, indicating long positions are being closed.

However in some PSU banks like PNB, open interest has increased significantly (Oct+Nov series). These stocks can be very volatile today (expiry day).

I am looking f/w for BJP to bring black money back and pay 15 lakhs to each poor mans account :dontknow:.
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