Understanding Market Manipulation

protrade

Well-Known Member
#1
It's obvious there's a lot of manipulation happening in the Indian markets. But very rarely do we see such a classic example that allows everyone to understand what's going on.

Reliance declared spectacular results on Friday. Beat the street estimates handsomely. Everyone expected the stock to go up. But stock is under severe pressure!

What gives?

See the volumes in the Cash and Futures, and you get the picture.

Assume you are an institution having 20M shares of Reliance. If you sell all those shares in a hurry, obviously the stock is going to be under great pressure.

In Indian markets futures trade at much higher volume than cash. So it is easy to sell a lot of shares and push cash market down, while buying twice or more the futures at a lower price - because the stock is getting hammered.

Once you stop selling, the stock will shoot up. And you make your money on the futures!

And by selling cash, and switching to futures, you can get at least twice as much leverage and create much bigger positions.

The trick is to not be conned into selling into this dip, but to have the guts to buy.

The one who blinks first, loses!
 

DSM

Well-Known Member
#2
Good post Protrade, But you have made assumptions which you need to state clearly. i.e you expect the stock as well as the market to move up higher, and so it is fine to catch the dips. Or that you are a long term investor, and do not mind buying dips, or are in fact happy to buy lower. Or that you have the patience to hold on to your trade. Or that you have enough capital to buy lower or when you spot another another good trade.

Re. 'The trick is to not be conned into selling into this dip, but to have the guts to buy' does not hold true when the market is in a downtrend. Just my view....



It's obvious there's a lot of manipulation happening in the Indian markets. But very rarely do we see such a classic example that allows everyone to understand what's going on.

Reliance declared spectacular results on Friday. Beat the street estimates handsomely. Everyone expected the stock to go up. But stock is under severe pressure!

What gives?

See the volumes in the Cash and Futures, and you get the picture.

Assume you are an institution having 20M shares of Reliance. If you sell all those shares in a hurry, obviously the stock is going to be under great pressure.

In Indian markets futures trade at much higher volume than cash. So it is easy to sell a lot of shares and push cash market down, while buying twice or more the futures at a lower price - because the stock is getting hammered.

Once you stop selling, the stock will shoot up. And you make your money on the futures!

And by selling cash, and switching to futures, you can get at least twice as much leverage and create much bigger positions.

The trick is to not be conned into selling into this dip, but to have the guts to buy.

The one who blinks first, loses!
 

protrade

Well-Known Member
#3
Yesterday's volume in Reliance was 4 times normal daily volumes on NSE. Today's was twice normal volumes. You just have to wait two more days for expiry to get your answers :)
 

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