Equity Futures: Cash market sell-off triggers short bets in Nifty 50

Informist, Wednesday, Jan 4, 2023


By Vivek Kumar


MUMBAI – Traders added short positions in Nifty 50 and Nifty Bank today as the indices fell 1% in the cash market. Nifty 50 closed at 18042.95 points, closer to its crucial support level of 18000 points. Holding above 18000 points level will be crucial for the index on Thursday, analysts said.


The open interest in January futures contract jumped over 8.3% to 11.9 mln, while in Nifty Bank, it rose 6.5% to 2.4 mln, according to provisional data. "Both in Nifty 50 and Nifty Bank (futures), the open interest have risen and volumes have gone up, which indicates that fresh short positions have been added," said Ratnesh Goyal, senior technical and derivatives analyst at Arihant Capital Markets.


In the options contract of the Nifty 50, traders bought out-of-the-money put options of 17900, 17700 and 17600 points. The premiums on all these contracts increased around 100% each with sharp rise in open interest. On the call side, aggressive selling was seen across major options. The premiums of these contracts fell between 80-90%.


Analysts said weakness could persist in the near-term and if Nifty 50 falls below 18000 points, further short positions could be added. The near-term outlook was cautious for the Nifty Bank index as well. "Selling pressure in the banking index, which was acting as a saviour so far, has further deteriorated the mood," said Ajit Mishra, vice president – technical research at Religare Broking.


In the options contract of the Nifty Bank index, traders sold 43500 and 43000 points call option today with the open interest in these contracts witnessing the sharpest increase. On the put side, the premium on 42900 points contract more than doubled, while that on 42000 points option fell nearly 29%. The sectoral index ended 1.1% lower at 42958.80 points.


–Nifty 50 Jan closed at 18102.95, down 214.35 points; 60.00-point premium to spot index

–Nifty 50 Feb closed at 18168.00, down 223.80 points; 125.05-point premium to spot index

–Nifty 50 Mar closed at 18248.30, down 215.35 points; 205.35-point premium to spot index


Total turnover in the futures and options segment of NSE was 291.06 trln rupees, as against 188.43 trln rupees on Tuesday.


Turnover in index options was 288.24 trln rupees compared with 186.09 trln rupees in the previous session. The total premium turnover of index and stock options was 690.87 bln rupees compared with 483.98 bln rupees on Tuesday.


HDFC Bank, Axis Bank, ICICI Bank, IndusInd Bank, Reliance Industries, Infosys, Adani Enterprises, Canara Bank, State Bank of India, Bank of Baroda, Maruti Suzuki India, Tata Steel, Ambuja Cements, Tata Motors, and Kotak Mahindra Bank were among the most actively traded underlying stocks.  End


Edited by Maheswaran Parameswaran



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