What Caused Stock Market Sell Off today

By | September 21, 2018

NSE has released a circular on Additional Surveillance Margin in Equity Derivative Segment, wherein they have changed the mechanism for calculation of Initial Margin for all Equity Derivatives contracts. The said margin has increased effective 14th Sep 2018 but will be made compulsory at client level with effect from 21st Sep 2018.

*Why are NBFCs selling off?*:

(1) There is news that DHFL bond has sold for a high implied yield to maturity of ~11%.

(2) This has made stock investors of DHFL worried about DHFL’s liqudity and sold off the stock.

(3) Other HFCs have sold off in sympathy with DHFL. Other non-HFC NBFCs have joined in the sell off.

(4) DHFL management has confirmed on air that they have not faulted and there is no liquidity crisis at DHFL.

(5) It is possible that the entity which sold DHFL paper did so because it was not satisfied with this exposure and wanted to sell anything of slightly questionable creditworthiness. *This is an example of risk aversion after the unfolding of the IL&FS saga even though entities being sold off have no direct exposure to IL&FS.*

(6) DHFL and IBHF have both confirmed on air they do not have any exposure to IL&FS.

(7) ILFS Group Fund Sells Approx. Rs 700 Crores Of Equity In DHFL For Cash Requirement – Sources

DSP MF tried selling commercial papers of DHFL in the secondary market. Since they couldn’t find immediate buyers they had to sell at a higher yield.

Nothing has changed for DHFL fundamentally.

300 cr bonds of dhfl sold by dsp at 11% 1 year maturity
Whole market shattered for Rs.300 crs

 

It was a great day for Blog Readers as Nifty moved as per Time Cycle Analysis both on Yearly and Daily and Intraday

 

Intraday Time Reversal was 12:17 Exactly top was done at that time

 

17 Sep was Yearly Trend change date we made Top at that day for the week

Nifty Technical Outlook and Time Cycle Dates for 2018

In Last Analysis we discussed of making a Short term bottom which is also done as we bounced more than 300 points from bottom

Nifty nearing short term bottom,EOD Analysis

11 thoughts on “What Caused Stock Market Sell Off today

  1. Bramesh Post author

    Thanks Raghuji for your kind words of appreciation !!

  2. Asad Ali

    Dear Sir. Thanks for your analysis. Unfortunately I couldnt see itas wasnt well , guess thats my fault. Kindly advice on nifty bank nifty for monday 24th september 2018.
    Regard’s,
    Asad

  3. Nanmith

    Supers bramesh with you analysis as usual, when will reversal start for nifty from 11150? Also please write an article on the trend for sugar stocks as there appears to be short term upward trend for sugar stocks…

  4. Raghu

    Dear sir, many many thanks for sharing your suggestions with out any selfishness at your heart. great predictive analysis. You are very very rich at your heart. Please keep going. God bless you always!!!

  5. Deepesh

    Razor sharp breakdown, you surely have terrific sources of info! 🙂

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