High volatility, low interest
The unusually high volatility is leading to a drop in participation in the derivatives market. The Nifty open interest (OI) at the start of the April series was just 10 million contracts, which according to analysts, is the lowest in 10 years. Further, the rollovers and OI in the Bank Nifty, second-most traded index after the Nifty, too is significantly below historical averages. Market players say high implied volatility (IVs) is leading to pricing anomalies and discouraging traders from building huge positions. “Until we see IVs cooling off, we will continue to see low volumes and erratic stock movements,” said an analyst.
Shares of YES Bank
have plunged 33 per cent in the last four trading sessions, even as the Bank Nifty index has gained 18 per cent. From its March highs of Rs 61, which it touched post the State Bank of India (SBI)-led restructuring, the stock has more than halved. Market experts said investors need to be careful while dealing in the counter till the time the stock finds its “real value”. “Shares of YES Bank
rose from Rs 6 to Rs 60 without much fundamental basis. In the last few trading sessions, the stock has dropped to more realistic value. The price trajectory is very suspicious, and could be partly because of complications surrounding lock-in and Nifty expulsion. Investors who want to bet on the bank’s revival should wait for a few weeks before building positions,” said a market expert.