Informist, Friday, Jan 19, 2024

By Padmini Dhruvaraj

MUMBAI – Investors covered their short positions on the Nifty 50 options chain expiring Thursday as the spot index snapped a three-day losing streak and ended higher today. Further, analysts said as the index recovered from its intraday lows, fresh longs were added cautiously at some out-of-the-money strike prices. 

"Nifty 50 has reclaimed its short term moving average but lacks decisiveness. We reiterate our cautious view citing the prevailing underperformance of the banking stocks," said Ajit Mishra, senior vice president of technical research at Religare Broking Ltd.

The benchmark index opened higher, tracking positive cues from global equity markets and rose more on the back of gains in shares of financial services and information technology companies. Eventually, the 50-stock index ended 0.8% higher at 21622.40 points.

The premiums of strike prices between 21500-22000 strike prices rose today. The 21650 strike price of the call option had the second-highest net change in open interest, with 1.64 mln new positions being added, while its premium rose 43.4% to 161 rupees. Additionally, some aggressive call selling was seen at 22450, 22500 and 22700 strike prices. 

On the put side, the 21600 strike incurred the maximum addition of open interest today, with 3.65 mln new contracts. However, the premium on the contract declined 44.6% to 110.10 rupees. Some aggressive put selling was also seen at 2060, 20500, and 17350 strike prices.

"Option data reveals writing in 22500 CE (call options), while 22000 CE witnessed buying interest. On the downside, 21500 PE (put options) observed writing throughout the entire trading session," said Avdhut Bagkar, technical and derivatives analyst at StoxBox.

Meanwhile, the January futures contract of the Nifty 50 closed at a premium of 52.6 points to the spot index. Open interest in the contract rose 3% to 11.42 mln, according to provisional data.

Going forward, analysts expect the Nifty 50 to consolidate at current levels. The benchmark index is expected to find support at 21400 points and face resistance at 21700 points. 

"We believe that the market is witnessing positive consolidation at current levels," Amol Athawale, vice president of technical research at Kotak Securities, said in a note. "For traders, as long as the index is trading above 21525, the pullback formation is likely to continue. Above that the market can go up to 21720-21775. On the other hand, the uptrend below 21525 will be weak and may fall to 21400 or 21250. Below this, traders may prefer to exit trading long positions," he added.

--Nifty 50 Jan closed at 21675.00, up 147.55 points; 52.60-point premium to spot index

--Nifty 50 Feb closed at 21824.05, up 148.25 points; 201.65-point premium to spot index

--Nifty 50 Mar closed at 21972.05, up 140.30 points; 349.65-point premium to spot index

HDFC Bank, Reliance Industries, Tata Consultancy Services, IndusInd Bank, Oracle Financial Services Software, Indian Railway Catering and Tourism Corporation, Bharti Airtel, and Axis Bank 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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