My Trade

Nifty delivered a brutal move on September 2, 2025, with a strong gap-up start but a severe fall after 1:30 pm, closing at 24,579.60—down 45.45 points (-0.18%) in a highly volatile session. The sell-off was driven by expiry pressures, global worries (notably US pharma tariffs), and sector rotation, with consumer stocks gaining and pharma losing ground.

Chapter 1: Opening Zone

Nifty opened gap up by 27.95 points at 24,653 and rallied to a high of 24,756.10 before reversing to a low of 24,522.35. The close at 24,579.60 marked a fall of 45.45 points as volatility surged (VIX up 0.97%).

Chapter 2: Early Movement

Early trade was bullish with a sharp rise past 24,700, driven by delta divergence—the first 5-minute green candle had negative delta, trapping sellers and fueling a short covering rally. By 9:27 am, a bullish FVG signaled strong buyer presence, sending Nifty up 100 points in 45 minutes. As call and put open interest built up near 24,700, market action went sideways. However, the market was trading at the bearish FVG of August 26, which led to liquidity being swept and a more than 200-point fall in the afternoon. Post-1:30 pm, put buyers and call sellers profited, while option sellers suffered losses as volatility peaked.

Bonus Point: Volatility and Hedging

Today’s session was exceptionally volatile—highlighted by the surge in VIX—and has once again demonstrated why proper hedging and risk management remains vital. Naked positions faced high risk as dramatic moves wiped out option sellers.

Chapter 3: Open Interest

A spike in open interest at 24,600 for calls and 24,550 for puts created a battleground, with the move post-1:30 pm erasing straddle and strangle sellers. The spectacular jump in the 24,700 put premium (from 9 to 172) was evidence of aggressive downside protection post-lunch.

Chapter 5: Sectoral Movement

• Consumer stocks were the day’s winners, helped by optimism ahead of GST reforms.
• Pharma stocks dragged Nifty lower, suffering from news of Trump’s 200% tariff proposal on imported drugs which raised fears of supply shortages and higher US prices.

Chapter 6: Global News Impact

• Trump’s tariff announcement on drugs spooked pharma and stoked volatility.
• Ongoing India-US trade negotiations, plus pre-GST Council meeting jitters, fueled uncertainty and risk-off sentiment across financials and healthcare.

Why Did Nifty Fall Sharply After 1:30 pm?

The collapse was fueled by:

• Expiry-driven unwinding in derivatives and profit booking after the early surge.
• A sharp jump in volatility spooked option writers and FII flows added pressure.
• Pharma sector sell-off on worries over US tariffs.
• Liquidity sweep around key open interest strikes (24,600 call and 24,550 put) escalated the pace of decline.