Equity Futures:Nifty 50 may test 16800-17000 amid improved sentiment

Informist, Monday, May 30, 2022


By Ankika Biswas


MUMBAI – As the Nifty 50 closed with gains for the third straight session today, surpassing its key hurdle of 16400 points, derivatives data showed the headline index may test 16800-17000 points amid an improved risk-on sentiment.


The 17000-strike price call option held the highest addition of open interest, suggesting resistance for the index at that level. The call options of 16800- and 16900-strike prices also saw a strong open interest build-up, resulting in their premiums more than doubling.


In fact, the over 4% rise in open interest in the June futures contract also suggested bullish bets.


With the Nifty 50 remaining firm above the 16400-mark on the back of broad-based buying, and traders moving to higher strike price call options, analysts say the index may retest the levels of 16800-17000 that were last hit during the beginning of this month.


Today, the index closed nearly 2% higher at 16661.40 points, at their highest levels in over three weeks, after testing the day's high of 16695.50 points. It has gained nearly 4% in its three-day winning streak. 


Further, bullish bets were seen in the derivatives counter of Mahindra & Mahindra today, as the stock surged over 6% in the cash market and was the top gainer on the Nifty 50 for the majority of today's session.


It hit a lifetime high of 1,011.75 rupees due to improved earnings growth prospects, aided by strong Jan-Mar earnings and plans for ramping up its electric vehicles business.


While some profit booking after today's sharp gains cannot be ruled out, analysts say the stock may regain its strong momentum and inch up another 200-300 rupees in the near term. They asked investors to use any dips in the stock as a buying opportunity for a target price of 1,300 rupees.


Today, it closed nearly 5% higher at 998.35 rupees.


While gains were largely broad-based, information technology companies saw strong buying, building on the strong earnings of their US peers and a fall in the 10-year Treasury yield. Aided by 2-7% sains across all its constituents, the Nifty IT index was up 4% and was the top sectoral index.


Analysts said the gains in the IT pack were largely on the back of covering of short positions, mainly in heavyweights like Infosys, Tata Consultancy Services and Tech Mahindra.


–Nifty 50 Jun ended at 16651.20, up 324.30 points; 10.20-point discount to spot index

–Nifty 50 Jul ended at 16669.95, up 330.35 points; 8.55-point premium to spot index

–Nifty 50 Aug ended at 16700.00, up 327.85 points; 38.60-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange was 58.37 trln rupees, higher than 48.56 trln rupees on Friday.


The turnover in index options was 55.89 trln rupees, compared with 46.29 trln rupees in the previous session. The total premium turnover of index and stock options was 339.80 bln rupees, lower than 357.41 bln rupees on Friday.

The most actively traded underlying stocks were Reliance Industries, HDFC Bank, Infosys, Mahindra & Mahindra, Tata Steel, JSW Steel, Jubilant Foodworks, Kotak Mahindra Bank, Tata Motors, Bharti Airtel.  End


Edited by Avishek Dutta


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