Informist, Thursday, Jan 25, 2024

By Padmini Dhruvaraj

MUMBAI – Investors added short bets on the options chain expiring Feb 1 as the Nifty 50 fell into the red. Further, call writers were active at some out-of-the-money strike prices, mirroring the bearish momentum in the market.

The benchmark index opened a tad lower and fell more, weighed by losses in shares of information technology and financial service companies. However, the 50-stock index rebounded sharply from its intraday low during the last hour of trade and ended 0.5% lower at 21352.60 points.

"Market is witnessing a lot of volatility ahead of the Budget with a negative bias as investors further booked profits to cut down their long positions on the expiry day," Prashanth Tapse, senior vice president of research at Mehta Equities, said. "Continuous outflows of foreign funds from the domestic equity market has been denting the sentiment over the past one week as they have net sold local shares worth more than 330 bln rupees in January so far," he added.

Premiums across strike prices of the call options declined. The 21400 strike was among the actively traded contracts, with 1.23 mln new open interest being added, while the premium fell 31% to 197 rupees. Additionally, some aggressive call selling was seen at 22500, 23000, and 23500 strike prices. 

"On the derivative front, the strikes of 21300 saw the addition of the highest call open interest" Avdhut Bagkar, technical and derivatives analyst at StoxBox, said in a note.

On the put side, premiums of at-the-money and some out-of-the-money strike prices rose. The 21400 strike price was among the top open interest gainers today. The premium on the contract rose 7.3% to 154.9 rupees. Further, aggressive put selling was seen at 20200, 20000, and 19500 strike prices. 

Meanwhile, the Nifty Bank index closed 216.25 points or 0.5% lower at 44866.15 points. "For Bank Nifty, it has formed bearish candle on weekly charts and currently it is trading near 200 day SMA (simple moving average)," said Amol Athawale, vice president of technical research at Kotak Securities. "For traders now, 200 day SMA or 44700 would act as a trend decider level. Above 44700, it could bounce back till 45500-45800. However, below 44700 it could slip till 44000-43750," he added. 

The 47000 strike price of the Nifty Bank's call options had the most open interest addition, while the 45000 strike price on the put options attracted the highest open interest build-up.

The February futures contract of the Nifty 50 closed at a premium of 157.40 points to the spot index. Open interest in the contract rose 36.3% to 12.52 mln, according to provisional data.

Going forward, analysts expect the Nifty 50 to consolidate until the Interim Budget for 2024-25 (Apr-Mar) is announced on Feb 1. The index is expected to find support at 21000 points for the next week and face resistance at 21500 points.

--Nifty 50 Jan closed at 21352.60, down 126.60 points; 1.60-point discount to spot index

--Nifty 50 Feb closed at 21510.00, down 102.35 points; 157.40-point premium to spot index

--Nifty 50 Mar closed at 21645.00, down 109.65 points; 292.40-point premium to spot index

Bajaj Auto, Reliance Industries, HDFC Bank, ACC, ICICI Bank, Tata Steel, Tech Mahindra, State Bank of India, Adani Ports and Special Economic Zone, Cipla, and Bharti Airtel were the most actively traded underlying stocks.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Manisha Baxla

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