Volatility hits F&O traders most as stoplosses gets triggered either side

MUMBAI – The volatility in the Indian market is hurting the day traders badly. The wild swings on the Nifty are triggering stoplosses on both buy and sell side forcing traders to exit making losses.

According to analysts, retail and HNI traders are staying low resulting in low trade volumes.

“Rising swing in the market is making scenario vulnerable for intraday traders. They can’t carry positions as one day the market is up by 100 points and the next day it goes down," Chandan Taparia, Derivatives Analyst, Anand Rathi

"Seasoned traders and smart option writers are also making losses. On one side time decay favours then but on other side rising volatility is keeping the option price high,” Taparia said .

The reason for higher vix is attributed to dollar-rupee level, global uncertainty, FIIs outflows to other markets, taxation issues, etc. Volatility spiked up recently on fears that the long term trend may not get negated even as the market corrected from its life time high of 9,119 to 7,996 levels.

India VIX has jumped by 25 per cent in last two weeks to 22 from 17 levels. If this volatile swing continues and it surpasses 22.12 then it would be at the highest level in last one year. It had hit high of 39 last May when Narendra Modi government came in to power.

“Overall index is giving intraday swing but mainly trading in range of 8,000 to 8,350 zones. Till it doesn’t cross and hold above 8,350, bears would have an upper hand,” Taparia added.

Retail and HNI traders are missing from the market, say analysts.

“There is very less activity in the market. Traders are waiting for 8,400 on the upside and 7900 on the downside to take fresh positions. Traders who used to take positions of 100 lots have now come down to 10 lots,” said Ashish Chaturmohta, Head Technical & Derivatives Desk Research, Fortune Equity Brokers.

“Even if traders are long, they are meeting their targets but before that stoplosses is getting hit and similar is the case with short traders. No one is making money right now,” Chaturmohta added.