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Informist, Thursday, Mar. 13, 2025

By Alina Geogy

MUMBAI – Traders continued to add short positions to the derivatives contracts of the Nifty 50 as their concerns about the trade policies of the US largely negated any cheer from softer-than-anticipated inflation data from India as well as the US. These bearish bets were noted on the same day that the benchmark 50-stock index closed at a one-week low, below its support level of 22400 points.

For call options of the Nifty 50 expiring Mar. 20, the highest change in open interest was at the 23500- and 22700–point strikes, where premiums fell 40-58%. These levels indicate an upside of 1.0–5.0% from Thursday's closing level. Among put options, the maximum change in open interest in call contracts expiring next week was at the 22000-point and 21500-point strikes, which also saw premiums falling 16-33%. These levels are down 1.8–4.0% from the current level.

The most active contract of the Nifty 50 expiring Mar. 20 was also the one with the highest open interest for both call and put options. This was the 23500-point strike on the call side and the 22000-point strike on the put side, suggesting that the index could remain within this range in the near term. On Thursday, the March futures contract of the Nifty 50 closed at 22437.00 points, a premium of 39.80 points to the spot index. Open interest in the contract rose nearly 2% to 17.77 million, according to provisional data.

On Thursday, the Nifty 50 closed slightly lower at 22397.20 points, its lowest level in a week. It had risen in early trade as market participants welcomed the fall in domestic CPI below the Reserve Bank of India's medium-term target of 4%. India's headline inflation fell to a seven-month low of 3.6% in February, lower than 3.9% estimated by an Informist poll. This fall in inflation came on the back of a moderation in food prices.

The latest CPI data solidifies the Reserve Bank of India's possible rate-cut trajectory, Elara Securities (India) said in a report. The brokerage projects a rate cut of 50 basis points in the financial year 2025-26 (Apr-Mar), with the next 25 bps rate cut likely at the upcoming monetary policy meeting in April. "We expect the RBI MPC to dial up its accommodative bias and keep focus on liquidity and cut policy repo rate by 25 bps," the brokerage said in the report.

Meanwhile, inflation in the US fell to a four-month low of 2.8% in February, slightly lower than 2.9% expected by a Reuters poll. While this inflation data also led to some cheer among market participants, several reports said it may not be enough to sway the US Federal Reserve to start cutting interest rates again, especially when tariff uncertainties persist. The market is now more worried about the outlook for growth in the US and the risk of deflation due to uncertainty around tariffs, rather than higher inflation, Dow Jones Newswires quoted RBC Capital Markets as saying in a note.

--Nifty 50 Mar closed at 22437.00, down 93.35 points

--Nifty 50 Apr closed at 22587.00, down 86.20 points; 189.80-point premium to spot index

--Nifty 50 May closed at 22685.00, down 95.65 points; 287.80-point premium to spot index

Reliance Industries, HDFC Bank, Infosys, ICICI Bank, Bajaj Finance, Bharat Electronics, Bharti Airtel, Avenue Supermarts, Tata Motors, Kotak Mahindra Bank, Dixon Technologies (India), Tata Steel, State Bank of India, REC, Axis Bank, and Adani Green Energy were the most active underlying stocks on the National Stock Exchange.  End

Edited by Rajeev Pai

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