Equity Futures: Investors place fresh short bets as Nifty 50 falls 1%

Informist, Thursday, Sep 28, 2023


By Padmini Dhruvaraj


MUMBAI – As the Nifty 50 fell to a fresh three-week low today, investors placed short bets across strike prices of the put options expiring on Oct 5.


The 50-stock index had opened the day higher but slipped gradually into the red and eventually ended 1% lower at 19523.55 points. "The prevailing weakness in heavyweights across sectors combined with feeble global cues is weighing on the sentiment," said Ajit Mishra, senior vice president of technical research at Religare Broking Ltd.


The premiums on put options across strike prices rose as market participants added short bets, indicating more fall for the Nifty 50. The 19500 strike price had the highest open interest with 4.82 mln positions, while the premium on the contract rose 163.6% to 81.85 rupees.


Meanwhile, some aggressive put option selling was seen at 18000, 18500, and 18800 strike prices. The 18000 strike had the highest net change in open interest with 3.36 mln new positions being added. However, the premium on the contract declined by 16.67% to 1.50 rupees.


"Technically, the bears are likely to be everywhere as long as Nifty trades below the 19867 mark," said Prashanth Tapse, senior vice president of research at Mehta Equities Ltd.


On the call front, premiums on both in-the-money and out-of-the-money contacts declined, mirroring the bearish sentiment in the market. The 19700 strike price had the highest new open interest addition of 4.74 mln positions. Additionally, some aggressive selling in call options was seen at 20200, 20300, and 21500 strike prices.


Meanwhile, the September derivatives of the Nifty 50 expired today. The September futures contract closed at a discount of 0.6 points to the spot index. Open interest in the contract fell 0.36% to 4.72 mln, according to provisional data.


However, the October futures contract of the Nifty 50 ended at 19655 points, a premium of 131.45 points to the spot index.


Going forward, analysts expect the Nifty 50 to trade with a negative bias until the commencement of the Jul-Sep earnings season. "After the failed attempt to reclaim 19750, we expect Nifty to inch further lower and test 19400. However, the major support is at 19200," said Mishra.


–Nifty 50 Sep closed at 19522.95, down 196.10 points; 0.60-point discount to spot index

–Nifty 50 Oct closed at 19655.00, down 173.90 points; 131.45-point premium to spot index

–Nifty 50 Nov closed at 19771.00, down 178.95 points; 247.45-point premium to spot index


Larsen & Toubro, Reliance Industries, Multi Commodity Exchange of India, Asian Paints, HDFC Bank, State Bank of India, Bajaj Auto, and Tata Consultancy Services were among the most actively traded underlying stocks.  End


Edited by Ashish Shirke


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