Pre-market preparation is a necessary step for every investor. It impacts his performance in the stock market throughout the day. The stock market is highly competitive and it requires constant attention. It would be an advantage to the investor if he keeps an eye on the market movement and gathers data before the market opens.
What happens on Thursday?
Thursday is the expiry day of derivatives contracts. Derivatives Contracts like Futures and Options (F&O) contracts are traded in the stock market through the online trading account. These contracts are bought by traders with this agreement that they would either buy or sell the underlying assets at a fixed price on some specific date in the future. This specific date is the expiry date of the derivatives contract.
On Thursday, buyers of futures contracts have to fulfil the agreement. It is a mandatory step and advisable not to ignore. Buyers of options contracts can choose either to fulfil the agreement or let it expire.
Why Thursday is the most important day
Thursday is assumed to be an important day because it is the expiry day of Nifty Banks’ weekly options contracts. And it is also the expiry day of weekly expiring options on the Bombay Stock Exchange (BSE).
5 Things To Know Before The Stock Market Opens On Thursday
Market volatility- Future expiry impacts the trading volume of the underlying assets. It attracts the attention of traders. The impact of the expiry day of financial derivatives like Stocks, Index futures on the price, volatility, and volume of underlying assets has always been an important area for investors, traders, and regulators.
Effect on stock prices- Derivative contracts impact stock prices. If an investor is bullish about the near future of the stock market, he buys the contract. So, the volume of ‘Buy’ contracts would increase compared to ‘Sell’ contracts. Investors of the cash market would also buy the stock with the anticipation of the price increase. If this buying habit increases in large quantities, the stock price increases.
Traders movement- Thursday is the expiry day of Futures & Options (F&O). Therefore, investors should take note of the opening positions of F&O. It gives a flavour of the market and represents the movement of trades.
Macro forces effect- It is advisable to know the current news feed related to macro forces of the economy and how it impacts the market. Macro forces like inflation, unemployment, economic output, etc. are constantly monitored by traders, investors, the government, and companies.
Global market- Investors should keep tracking the movement of the global market on Wednesday. Wednesday’s closing figure of S&P 500, Nasdaq100, and Russell 2000 index futures overnight performance would impact the performance of the Indian stock market on Thursday.
An investor should take care of these above-mentioned points before taking any position in the current stock market, as it is highly competitive. In this environment, securities are traded through a 24-hour cycle due to technological advancement. An investor can create a Demat account and access global market position, their updates, and suggestions for positions. He can access even currency and commodity market updates through his online trading account.
Every investor wants to earn money in the share market. He can earn profit with some pre-market preparations and some alertness. An investor can catch the best deal if he is smart and a little prepared. If he is aware of market index futures, global market index futures, macroeconomic factors & the latest corporate news, he can make some strategy for investment. A disciplined investor can earn a good profit in the stock market.