Anil Singhvi explains why caution is a must today and when to do profit-booking

Stock markets opening positively and negatively on alternate trading days is a sign of volatility, Zee Business Managing Editor Anil Singhvi said. The Market Guru was responding to a question on what he sees behind this trend.  

Markets have shown a strange trend since 8 June when they have ended on a high or a low alternately. On 8 June, markets ended positively while closing in the red on 9 June. Likewise on 10 June they were in a positive zone only to end in the negative on 11 June. This trend has continued till now.

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हफ्ते का आखिरी सत्र में क्यों रखनी है ज्यादा सावधानी और कब करनी है मुनाफावसूली?....बता रहे हैं अनिल सिंघवी#EditorsTake #NSE #BSE #Sensex #Nifty #BankNifty @AnilSinghvi_ pic.twitter.com/nj0LNYR6zR

— Zee Business (@ZeeBusiness) June 19, 2020

The Market Guru said that this could not be interpreted as a trend. He further said that the markets cannot remain flat for long and it is their inherent character to see a fall or rise on sustained basis.

There may not be much intraday volatility today and some profit booking activity could be see in the second half of the day if the market touches the right levels, Singhvi said. 

The Managing Editor further said that there would again be stability for some time despite the current volatility.

If the global geo-political situation remains under control and there is not any upheaval in the US markets, then the volatility index (VIX) will come down.

The problem develops if there is an intraday or overnight volatility creating problems in taking trading decisions. Taking positions is such situation is difficult and if you have to hedge your bets in options, then there is a high premium that you have to pay.

A stable market will ensure that there is a lower premium on options, lower VIX. The major problem is only because of tensions with China which may lead to a wider trading range. The global markets have already started giving indications of lower volatility, he added.   

He said that today is a good day to break this phenomenon as the Nifty closed above the 10000 mark on Thursday and it was trading in the green on Friday, too.

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He said that even the US markets have seen a lot of volatility in recent times, though there has been a calm in the last two days.