The Nifty GEX (Gamma Exposure) index measures the sensitivity of option contracts to changes in the underlying price, and can result in market price swings when imbalances occur. The absolute value of the GEX index represents the number of shares that will be bought or sold to push the price in the opposite direction of the trend when a 1% absolute move occurs. For example, if the GEX is at 5.0 million and the price moves +1%, then 5.0 million shares will be sold as a hedge to push the market to the downside.
- When GEX is a high number, it acts as a brake on market price.
- When GEX is low (including negative), it acts as an accelerator.
A high GEX acts as a brake on prices during a rising market, while a low (or negative) GEX acts as an accelerator.
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