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SEBI’s NEW F&O RULES & IRAN-ISRAEL WAR: MARKETS TURN RED | Weekly Update October 4th

SEBI’s NEW F&O RULES & IRAN-ISRAEL WAR: MARKETS TURN RED | Weekly Update October 4th

SEBI's-NEW-F&O-RULES-&-IRAN-ISRAEL-WAR

 Hello Readers! 

We hope you’ve had a better week than our market’s major indices that seemed to see tough lows over the past trading week. The heating tensions between Iran and Israel, caused nervousness in the market, meanwhile SEBI also introduced 6 new major changes in the futures and options markets that will affect the F&O volumes once implemented.  

Let’s dissect the past week and what it means. So, let’s get started, first with some market highlights.  


🧾In this Article 

Weekly Market Wrap-up 

Quick Bites 

Stocks in News 

Sustainability News 

IPO corner 

Cover story: SEBI’s NEW F&O RULES & IRAN-ISRAEL WAR: MARKETS TURN RED   

Key events 


 📈 Weekly Market Wrap-up 

 Geopolitical tensions between Israel and Iran and a rise in foreign outflows cause Indian equity markets to end the markets with strong losses, marking their biggest weekly fall since June 2022. The Nifty 50 fell by 4.6% to 25,014.60,  

The SENSEX experienced a decline of 4.8% this week, closing at 81,688.45. This downturn was in line with the broader market trend, as all major indices saw losses.  

Index  Change (%) 
Nifty 50  -3.9 
Nifty Bank  -5.4 
Nifty Midcap Select  -3.4 
Nifty 100  -4.4 
Nifty Midcap 50  -3.3 
Nifty Midcap 100  -3.3 
Nifty Smallcap 50  -2.3 
Nifty Smallcap 100  -2.6 
Nifty IT  -0.6 
Nifty Pharma  -0.7 
Nifty PSU Bank  -1.3 
Nifty Private Bank  -6.1 

 


 Sector Spotlight 

Over the past week, major sectors witnessed a downturn. The BSE IT index fell by 1.01%, the BSE FMCG index by 3.68%, the BSE CG index by 4.62%, the BSE CD index by 3.07%, and the BSE HC index by 1.97%.  

 Nifty 100 Top gainers  

  • Info Edge (India) Ltd. = 8,198.65 ↑3.2% 
  • JSW Steel Ltd. = 1,033.75 ↑2.8% 
  • Siemens Ltd. = 7,246.85 ↑2.4% 
  • Bank of Baroda = 250.59 ↑2.2% 
  • Hindalco Industries Ltd. = 747.90 ↑1.8%

Nifty 100 Top losers 

  • Macrotech Developers Ltd. = 1,173.25 ↓15.3% 
  • Adani Green Energy Ltd. = 1,801.20 ↓12.5% 
  • JSW Energy Ltd. = 699.50 ↑9.9% 
  • Avenue Supermarts Ltd. = 4,737.55 ↑8.9% 
  • Cholamandalam Investment and Finance Company Ltd. = 1,497.40 ↓8.8%

FII and DII Activity: 

Foreign Institutional Investors (FIIs) were net sellers for the week, with a total net outflow of –40,511.50 crores. Domestic Institutional Investors (DIIs) were purely net buyers the entire week, investing a good 33,074.39 crores in Indian equities.  

 

Date   FII Net Activity in crores  DII Net Activity in crores 
30-Sep-24  -9,791.93  6,645.80 
1-Oct-24  -5,579.35  4609.55 
2-Oct-24     
3-Oct-24  -15,243.27  12913.96 
4-Oct-24  -9896.95  8905.08 
Total  -40,511.50  33074.39 

 


Global Gossip 

The DOW increased by 39.75 points to close at 42,252.75, representing a 0.09% increase. The NASDAQ gained 18.26 points to reach 18,137.85, a 0.10% increase. The S&P 500 rose by 12.90 points to 5,751.07, a 0.22% increase. 

Meanwhile, the FTSE decreased by 40.13 points to 8,280.63, a -0.48% decline. The DAX fell by 252.70 points to 19,120.93, a -1.89% decline. The CAC dropped by 250.43 points to 7,541.36, a -3.21% decline. The NIKKIE decreased by 1,193.94 points to 38,635.62, a -3.00% decline. 

On the other hand, there were some positive developments in Asia. The HANGSENG increased by 2,104.57 points to 22,736.87, a 10.20% increase. The SHANGHAI rose by 248.97 points to 3,336.50, an 8.06% increase. 

 


Rupee Report 

The Indian Rupee (INR) weakened slightly against the US Dollar (USD) last week. The rupee closed at 83.98, compared to the previous week’s pre-close of 83.66. This represents a depreciation of 0.32%. 


 Gold Surges 

As of October 5, 2024, gold prices experienced a slight decline. The price closed at $2,652.75, down from the previous week’s closing price. This represents a decrease of $3.01 or 0.11%. Over the past week, gold prices have fluctuated between a low of $2,632.63 and a high of $2,669.68. The 52-week range for gold prices is from $1,811.03 to $2,670.06. Despite the weekly decline, gold prices have shown a positive trend over the past week, with a return of 2.37%. 


WATCH OUT: SEBI introduces 6 new measures for F&O trading 

SEBI introduced new measures to curb F&O trading and protect retail investors. Here’s a quick look at the changes: 

  1. Reduced the number of weekly expiries for index derivative contracts. 
  1. Increased contract size value for derivatives. 
  1. Implemented an additional 2% extreme loss margin (ELM) for open short options on expiry days. 
  1. Mandated upfront collection of option premiums. 
  1. Removed calendar spread benefits for contracts expiring on the same day. 
  1. Introduced intraday monitoring of position limits for equity index derivatives.

🍟 Quick Bites 

🏡 India’s housing sales in 8 major cities rose 5% year-on-year to 87,108 units in the July-Sept quarter, with Mumbai leading the sales. 

🤝 Google has partnered with Muthoot Finance for gold-backed loans and Aditya Birla Finance for personal loans through GPay. 

🌱 Adani Group has partnered with Google to increase the supply of green energy to commercial and industrial customers in India. 

⚡ The government launched PM E-DRIVE, a new EV subsidy scheme with an allocation of ₹10,900 crore to promote EV adoption. 

📉 India’s manufacturing PMI fell to 56.5 in September, indicating a slower growth compared to August. 

💰 India’s GST collection rose 6.5% year-on-year in September to ₹1.73 lakh crore. 

📲 UPI transactions surged 31% year-on-year to ₹20.64 lakh crore in September. 

✈️ Air India completed the merger of its low-cost airlines Air India Express and AIX Connect. 

🚫 SEBI imposed a penalty of ₹12 lakh on NSE Data and Analytics for regulatory violations. 

📊 Trent and Bharat Electronics joined Nifty 50, while Divi’s Lab and LTIMindtree were removed. 

🌍 India’s current account deficit rose to 1.1% of GDP in the April-June 2024 quarter. 

🚢 India’s Shipping Ministry launched a 5-year Cruise Bharat Mission to develop cruise terminals and infrastructure. 

🔋 JSW MG Motor India and Vidyut partnered to offer a ‘battery-as-a-service’ program. 

💵 Adani Airport Holdings raised ₹1,950 crore through a bond issue. 

📈 India’s forex reserves jumped by $12.588 billion to reach a record high of $704.885 billion. This surge marks one of the highest weekly increases ever and is the first time reserves have crossed the $700-billion mark. 


🔎 Stocks in news 

 🔫 Bharat Forge’s subsidiary Kalyani Strategic Systems will develop and manufacture artillery gun platforms in collaboration with U.S. defense companies AM General and Mandus Group. 

💊 Dr. Reddy’s signed a non-exclusive licensing agreement with U.S.-based Gilead Sciences to manufacture and commercialize Lenacapavir, an HIV treatment drug, in India and 120 other countries. 

📈 REC reported a 13.71% year-on-year rise in total loans disbursed to ₹47,303 crore in the July-Sept quarter. 

🏦 PNB reported an 11.84% year-on-year rise in total loans disbursed to ₹10.12 lakh crore in the July-Sept quarter. 

💵 Biocon’s subsidiary, Biocon Biologics, has refinanced its $1.1 billion debt through USD bonds worth $800 million. 

📊 ITC’s subsidiary, ITC Infotech, has acquired Blazeclan Technologies for ₹485 crore. 

🔗 Adani Enterprises has amalgamated its subsidiaries Adani Infrastructure and Mundra Solar Technology with another subsidiary, Adani New Industries. 

🏥 Mankind Pharma has received approval from CCI to acquire Bharat Serums and Vaccines for ₹13,630 crore. 

⚡ JSW Energy’s subsidiary, JSW Neo Energy, received a supply order from MSEDCL for 1,500 MW / 12,000 MWh of pumped hydro energy storage. 

🌍 Sun Pharma has signed a global licensing deal with Italy-based pharmaceutical firm Philogen to commercialize its under-development anti-cancer drug, Fibromun. 

💰 Mankind Pharma’s board approved raising ₹10,000 crore through commercial papers and non-convertible debentures. 

🚆 RVNL received ₹283.70 crore worth of orders from East Coast Railway. 

💊 Aurobindo Pharma received US FDA approval to sell its antibiotic drug Cephalexin, while the FDA issued 10 procedural observations during an inspection at one of its subsidiaries in Telangana. 

🏗️ Godrej Properties’ board has approved raising ₹6,000 crore. 

🛠️ Bharat Electronics has received approval from the Ministry of Corporate Affairs to set up ‘BEL IAI AeroSystems’, a Joint Venture (JV) with Israel Aerospace Industries. 

📉 RVNL was the lowest bidder for a ₹180 crore order from East Central Railway. 

⛔ Indian Oil has withdrawn its ₹22,000 crore rights issue. 

📡 Airtel paid ₹8,465 crore in advance for the spectrum it acquired in 2016. 


Sustainability news: 

🌱 Adani Green received an energy supply order through a subsidiary, which will be fulfilled from a new 61.4 MW renewable energy plant in Khavda, Gujarat. 

⚡ Tata Power signed an agreement with the Rajasthan government for an investment of ₹1.2 lakh crore, including ₹75,000 crore in green energy. 

🌞 NTPC’s subsidiary, NTPC Green Energy, signed an MoU with the Rajasthan government to build 25 GW of renewable energy projects. 


🚀 IPO corner 

Upcoming SME IPOs: 

  • Khyati Global Ventures Limited IPO (Oct 04, 2024 – Oct 08, 2024) 
  • Shiv Texchem Limited IPO (Oct 08, 2024 – Oct 10, 2024) 
  • Garuda Construction and Engineering Limited IPO (Oct 08, 2024 – Oct 10, 2024) 

News: 

  • A record 15 companies filed their IPO draft prospectus with SEBI on September 30, taking the total filings for the month to 41, the highest ever recorded. 
  • Subam Papers Ltd’s IPO closed on Thursday with a 92.93 times subscription at a price band of 144-152 per share. 
  • Swiggy has increased its IPO size to 5,000 crore, with only the primary issue component being increased. 
  • Hyundai Motor India is likely to launch a $3-billion IPO on October 14, subject to market conditions and geopolitical tensions. 
  • KRN Heat Exchanger IPO was listed at a premium of 118.18%.

Iran-Israel War: A Looming Threat 

The escalating tensions between Iran and Israel have also cast a dark shadow over global markets. The threat of a military conflict between these two nuclear powers has created a climate of fear and uncertainty that has prompted investors to pull their money out of riskier assets, such as stocks. 

 The potential for a regional war could disrupt global supply chains, increase energy prices, and damage the global economy. For example, a disruption in oil supplies could lead to a surge in energy prices, impacting businesses and consumers, and potentially leading to a slowdown in economic activity.


 The Impact on Indian Markets 

The combined effect of SEBl’s new rules and the Iran-Israel crisis has been particularly severe for the Indian stock market. The benchmark indices, the Sensex and Nifty 50, experienced significant declines, falling by ~4-5% in the past week, while the Nifty 50 has declined by around 4%. 

 Many sectors, including banking, finance, and technology, have been hit hard. The banking sector has been particularly vulnerable due to concerns about the potential impact of a slowdown in economic activity on loan demand and asset quality. The technology sector has also been under pressure, as investors worry about the impact of a global economic downturn on corporate earnings. 

 Small and mid-cap stocks have been particularly vulnerable to the market downturn. These stocks are often more volatile than their larger counterparts and are more susceptible to being sold off during periods of market stress. For example, the Nifty Midcap 100 index has declined by over 6% in the past month.


 Outlook: 

Given the geopolitical uncertainties, investors should stay cautious and focus on companies with strong fundamentals. It would be advisable to exercise caution and avoid making impulsive decisions for the wellbeing of your portfolio.  

 Upcoming key financial events for the week: 

Date  Event 
04-Oct-24  USD Average Hourly Earnings m/m
USD Non-Farm Employment Change
USD Unemployment Rate
INR Nikkei Services PMI (Sep)
INR FX Reserves, USD 
09-Oct-24  USD FOMC Meeting Minutes 

INR Interest Rate Decision 

10-Oct-24  USD Unemployment Claims
USD Core PPI m/m USD CPI y/y 
11-Oct-24  USD GDP m/m
USD Core PPI m/m
INR CPI (YoY) (Sep)
INR Industrial Production (YoY) (Aug) 
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