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A lot of people are talking about the 10 AM dump that seems to keep happening referred to as the "10 AM dump". Some people are using this as a timed short strategy.
There are rumors accusing the quant trading firm Jane Street of using a strategy to crash the markets and make billions.
Here is how their strategy supposedly worked:
**Morning phase**
In the morning session, the Indian entity aggressively bought Bank Nifty component stocks and futures.
Orders were large enough that, on some days, they represented a significant share of total market volume.
Buying heavyweight stocks pushed the index higher.
Meanwhile, offshore entities built large bearish options exposure:
* selling call options
* buying put options
The derivatives exposure was much larger than the stock position in delta terms, suggesting the equity purchases were not the primary bet.
They were the setup.
**Afternoon phase**
Later in the day, the flow reversed.
The same stocks and futures were sold in size, pushing the index lower toward settlement.
If the index closed near certain strike levels:
* short calls expired worthless
* puts increased sharply in value
The cash trades showed modest losses.
The derivatives book captured the real profit.
One example cited by SEBI:
Morning buying: ₹4,370 crore (approx USD 477,000,000)
Loss on stocks/futures: ₹61.6 crore (approx USD 6,700,000)
Profit on options: ₹734.9 crore (approx USD 80,000,000)
Net profit in one day: ₹673 crore (approx USD 73,000,000)
Jane street seems to be at the center of every market manipulation event:
* An interim order from Securities and Exchange Board of India, accusing the company of manipulating Bank Nifty options on expiry days, and freezing assets worth around $570M related to trades made by Jane Street.
* The lawsuit between Jane Street and Millennium Management, in which the latter revealed the existence of a highly profitable index options trading strategy in India, with the potential to make around $1 billion in a single year, although the majority of the details were blacked out in the lawsuit.
* An ongoing lawsuit in which Terraform Labs is a defendant, and there are allegations of insider trading related to the collapse of TerraUSD. (crypto stablecoin)
* In 2024, Trump Media and Technology Group wrote a letter to Nasdaq, in which it accused several companies, including Jane Street, of naked short selling after a sharp decline in its stock prices, although no charges were filed against the company, and it was simply mentioned in the lawsuit.
Where exactly is the line between sophisticated derivatives trading and market manipulation when the underlying market is used to influence settlement prices?