InvestorQ : What is your trading view for the last day of the year on 31 December 2020? Will the F&O expiry lead to correction in the market?
indhumathi Sayani made post

What is your trading view for the last day of the year on 31 December 2020? Will the F&O expiry lead to correction in the market?

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diksha shah answered.
6 months ago
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As you rightly pointed out, 31 December happens to be the last F&O expiry of the year and therefore the markets are likely to be volatile. Let us not forget that the long positions have been quite robust and also rolled over in November. Hence, we could see some pressure on indices today as traders to unwind positions. Also higher margins kick in from January 2021.

We need to be cautious on sectors that could be vulnerable to unwinding pressure. For example, look for some unwinding pressure on sectors like metals where the rally has been one-sided in the last 2 months. Select autos and IT could also see unwinding. We could see selective buying in pharma ahead of the massive vaccination effort in January.

Foreign buying has continued through December. FPIs were net buyers to the tune of Rs.1825 crore while DFIs sold Rs.587 crore on Wednesday. The month of December saw record flows from FPIs, even bettering the robust flows of November. FPIs have infused close to Rs.120,000 crore in the last two months of the year and $23 billion during the year.

Global markets were largely non-directional. On Wednesday the Dow and NASDAQ were marginally higher while the European markets including the FTSE,CAC and DAX were in the red. In early trades, the SGX Nifty is flat to negative but that could change depending on the F&O expiry progress. Unwinding pressure is likely to be rampant on Thursday.

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