Equity Futures: Investors cover shorts on 20800-20950 call options

Equity Futures: Investors cover shorts on 20800-20950 call options

Informist, Wednesday, Dec 13, 2023


By Padmini Dhruvaraj


MUMBAI – Investors covered some of the short bets on 20800-20950 strike prices of the call options expiring Thursday after the Nifty 50 recovered in the spot market and ended in the green, said analysts.


The 50-stock index, which opened higher, fell immediately because of profit-booking but recovered on the back of gains in shares of automobile and pharmaceutical companies. Eventually, the benchmark index ended 0.1% higher at 20926.35 points. "The index (Nifty 50) generated modest buying interest from the day's low of 20769 that bolstered for a relatively stronger intraday technical pullback," Avdhut Bagkar, technical and derivatives analyst at StoxBox said in a note.


However, the premiums across strike prices of the call options fell today, indicating that the recovery in the index was likely not a decisive move. "Indications are in favor of further consolidation in the index but the bias would remain on the positive side," said Ajit Mishra, senior vice president of technical research at Religare Broking.


The 20900 strike price of the call options had the highest net change in open interest with 5.38 mln new positions, while the premium declined 41.9% to 63.50 rupees. Additionally, some aggressive call selling was seen at 21100, 21200, and 21500 strike prices.


The premiums across all the contacts of the put options also fell, mirroring the indecisiveness in the market. Meanwhile, the 20800 put strike attracted the highest open interest of 4.44 mln new contracts. The premium on the contract, however, fell 69.3% to 9.55 rupees. Some aggressive put selling was seen at 20500, 20400, and 20200 strike prices.


Meanwhile, the December futures contract of the Nifty 50 closed at a premium of 109.10 points to the spot index today. Open interest in the contract fell 2.59% to 11.02 mln, according to provisional data.


Going forward, analysts said the market will take cues from the US Federal Reserve's Federal Open Market Committee meeting outcome due later today. The Fed is expected to keep the Fed funds target rate unchanged at 5.25-5.50%. As per the CME FedWatch Tool, the market is hoping for a rate cut in May. 


"All eyes are on US central bank’s policy outcome to be released late today, where the focus will be more on Powell's commentary for any hint on the rate cut next year," said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.


The Nifty 50 is expected to find support at 20700 points and face resistance at 21000.


--Nifty 50 Dec closed at 21035.45, up 12.50 points; 109.10-point premium to spot index

--Nifty 50 Jan closed at 21165.00, up 15.15 points; 238.65-point premium to spot index

--Nifty 50 Feb closed at 21273.80, up 12.00 points; 347.45-point premium to spot index


State Bank of India, REC Ltd, Bank of Baroda, Power Finance Corp, TVS Motor Co, Interglobe Aviation, UltraTech Cement, Tata Power, NTPC, and Hero MotoCorp were among the more actively traded underlying stocks.




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


Edited by Vidhi Verma


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