Expiry day. The line held, they got shorter

A very good morning, guys. Yesterday the world walked into our market with a falling knife. Over the weekend, missiles flew in the Middle East for the first time since the truce. Wall Street had already cracked last Thursday. By Monday morning, Asia was reeling, Korea was down 9%, Japan down 4%, and our own market gapped straight toward that 23,000 mark. And then India did something quietly stubborn. It refused to break. 23,000 yesterday held to the point. The low of the day was 23,070, and from there we closed at around 23,123, down just over 1%, while the rest of Asia was bleeding 4 to 9.

We were holding strong. So here is the twist, guys. The big FIIs did not take that as a reason to relax. They got heavier short, into a market that would not fall. Today is expiry, and overnight the world has flipped again. This is The Tanmay Edge. You are listening to episode 56. I am Tanmay Kurtkoti. Let's go. Let me set the table, because today is one of those days where the backdrop matters more than the chart. Starting with the close. Nifty 23,123, down 243 points, about 1%.

Sensex 73,524, down 719 points, also down about a percent. Nothing dramatic in the number itself. What's dramatic is the company we kept. While we lost one percent, Korea lost nine, Japan lost four, Taiwan lost four. We were the calmest house on a burning street, again, in Asia. Now hold that thought and look at who was doing what under the surface. The FIIs walked into Monday already betting against the market, short the futures. And on Monday, even as the market held, they added almost 10,000 more short contracts.

Their net short position in index futures is now 2,77,614 contracts. That is the heaviest they have been short in the entire fall. Read that again. The market would not go down, and their answer was to press the bet harder and keep the shorts open. On the other side of the trade sits the DIIs, our own mutual funds and institutions, who bought cash again, around 5,000 crore. Nine days they have been buying. They are the floor under the market. And the retail crowd?

They are long the index, sitting on the same side as almost no one who usually wins. So that is the standoff. The biggest foreign bear position of the entire fall, against the domestic DIIs who keep buying the cash market. Two giants leaning into each other, and today, expiry day, is the day it gets pulled into. Now here is why this morning matters. Overnight, the story that scared everyone started to calm down. The two sides in the Middle East signalled they want a ceasefire, and the markets believed it.

Look at Asia right now. Korea, which fell nine percent on Monday, is up three percent this morning. Taiwan up over two percent. Japan almost one percent up. 7. And our GIFT Nifty is at 23,133, basically flat, pointing to an open right around yesterday's close. Now connecting those dots, the thing that dragged the whole world down is fading, and the people most short of our market are the FIIs, who pressed their bet at exactly the wrong moment, if this calm holds. That is the tension into the expiry.

If the fear keeps draining, those shorts are not protection anymore. They are the fuel. The market only has to climb, and they are the ones who have to chase it. So let's talk levels, because expiry day is won and lost at a specific pin strike. 23,000 is the line. It sits about 120 points below where we closed, and it is the level the buyers defended all Monday. As long as we hold above it, the bulls have the leading hand. 23,200 is the cap, about 80 points above the close, where the sellers have stacked the most fresh resistance overnight.

Nothing exciting happens until we clear it. The moment we hold above 23,200, the short squeeze starts, and the next stops are 23,300 and 23,400. And listen carefully, because this is the gate: only above 23,400, holding, does the sell-the-rise idea actually pause. Until then, every bounce into 23,200 and 23,300 and 23,400 is a place where sellers will sell the rise. To the downside, lose 23,000 and stay below it for 15 to 30 minutes after a candle closes, not a wick, and then 22,850 is the first level we are looking at, after which 22,500 is where the buildup has started to happen.

But here is the most likely script of an expiry day like this one. The fear is cooling, the open is flat, and on expiry the market tends to get pulled toward the middle, where the most options expire worthless. The middle today is 23,000 to 23,150. So my base case is a tug of war that settles inside that band, the buyers defending 23,000 and the sellers defending 23,200 to 23,300, both quietly collecting premium as the market oscillates between 23,000 and 23,300. Volatility tells the same story.

Our fear gauge, India VIX, jumped almost eight percent on Monday, to 17. The one-day move the options are pricing is only about 230 points. On an expiry day, if we pin in the middle, those options bleed value extremely fast. You can lose half your premium by lunch just holding a bought option that goes nowhere in the early trade. So the trade, and keep it boring, because boring wins on expiry. If we open soft and tag 23,000, that is your support, you can buy the dip for a bounce, or sell a spread at 23,000 and 22,800, with invalidation on a close below 23,000, toward that 22,950 mark.

If we rally into 23,200 and stall, that is your cap, you sell the rise, stop above 23,300, that is where you sell call spreads. Only above 23,300 to 23,400 do we actually flip and think long, on a closing basis. And do not buy options blindly hoping for fireworks today, because if it pins, you hand half your premium to the clock. Now stepping back, because there is a bigger idea here, and it is the reason I keep coming back to this market.

India fell out of love with the world months ago. We de-rated. We got cheaper while everyone else got more expensive and kept rallying. So when the world panics, we have less air to fall through, and we have shown it the last two sessions running. And when the world calms, like it is trying to this morning, we are the spring that has been pressed down the longest. The FII desks are betting India finally moves out and catches down. The domestic money is betting the opposite, that this is where you hide and where you bounce.

Today's expiry is more than a data point, it is that argument. My read? Watch 23,200. If the calm holds and we take it, the people who are most short find out the hard way. The data doesn't lie. Narratives do. That is your Tuesday. Expiry day, the line at 23,000 held, and the FIIs are the most short they have ever been in this fall, and the world is trying to calm down. The trade for today is buy the dip toward 23,000 support, sell the rise toward 23,200 resistance, and flip long only above 23,400 on a closing basis.

This is The Tanmay Edge. Quick housekeeping, guys. com. If this helped you or made any sense, share it with one trader friend who needs it right now. Hit that subscribe button so you never miss a morning. com, then on Apple Podcasts and Spotify. And leave me a rating, guys, I am waiting for your reviews. I was Tanmay Kurtkoti, this was The Tanmay Edge, and I will see you tomorrow once again at 8:30. Until then, have a happy expiry.