Equity Futures:Traders play safe in F&O eyeing Budget-led volatility

Informist, Friday, Jan 28, 2022


By Ankika Biswas


MUMBAI – The headline Nifty 50 started off the February derivatives series in the red today, although marginally lower, amid some caution ahead of the Union Budget due next week. Traders were seen taking positions accordingly, as they braced themselves for elevated volatility ahead of the budget.


If the budget is along expected lines, analysts expect the Nifty 50's upmove to be restricted to 17500 points, breaching which the next hurdle is seen at 18000 points, as per writing at these strike-price call options.


On the contrary, if the index was to fall in case of any disappointments in the budget, the downside is likely to be restricted to 16500-16700 points, according to selling at these strike-price put options.


With elevated volatility on cards, analysts recommended investors to tread with caution, but as long as the Nifty 50 remains firm above the crucial support of 16800-mark, the view still remains on the positive side.


Today, the 50-stock index closed at 17101.95 points, after testing intra-day low and high of 17077.10 points and 17373.50 points. The open interest of the February futures contract was up over 7%.


Anticipating similar volatility in the banking space, analysts recommended investors to only bet on this sector after the budget, which is likely to give more clarity on the trajectory going forward.


In case of supportive policy measures, the Nifty Bank may test 39000 points. On the contrary, if it were to fall further, the index is seen finding support at 36000 points. Today, the index closed 0.8% lower at 37689.40 points. Open interest of the February futures contract rose over 8% today.


Some covering of short positions brought about a recovery in the information technology space today. However, given that most short positions have been rolled over to the February series, analysts expect the sector to remain under pressure going ahead.

-–Nifty 50 Feb ended at 17133.40, down 16.15 points; 31.45-point premium to spot index

-–Nifty 50 Mar ended at 17190.00, down 0.10 points; 88.05-point premium to spot index

-–Nifty 50 Apr ended at 17240.00, down 50.30 points; 138.05-point premium to spot index

The total turnover in the futures and options segment of the National Stock Exchange was 41.89 trln rupees compared with 200.6 trln rupees on Thursday.
The turnover in index options was 38.62 trln rupees, against 195.7 trln rupees the previous day. The total premium turnover of index and stock options was 415.3 bln rupees, compared with 498.75 bln rupees on Thursday.
The most actively traded underlying stocks were Bharti Airtel, Tata Motors, ICICI Bank, Infosys, Reliance Industries, LIC Housing Finance, Tata Power, State Bank of India, HDFC Bank and Bajaj Finance.  End


Edited by Michael Correya


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