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Informist, Tuesday, Jul 16, 2024

By Apoorva Choubey 

MUMBAI - Writing seen in the weekly put and call options of the Nifty 50 suggests that market participants are paring bets ahead of the Budget announcement next week, as the index is seen consolidating in a narrow range in the lead-up to the event. Today, traders sold call options across all strikes in the current weekly series of the index, while also writing puts across the board. 

The Nifty 50 ended at its highest ever closing level of 24613 points, up 0.1% or 26.30 points. The 50-stock index and Sensex have ended at fresh lifetime closing highs for three straight sessions now, which is making some market watchers cautious.    

"Markets rallied for the third consecutive day amid buying by FIIs and a rally in the global markets," noted Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services. As the Budget draws near, anxiety in the market could increase, and action may turn quite stock-specific due to earnings announcements, he said. 

The 24600 strike price option of the Nifty 50 saw heavy put-writing but the 24650 and 24700 strikes saw significant call writing, noted derivatives and technical analysts at SAMCO Securities. The technical patterns formed by the spot index's movement also suggest indecision among participants, they said. The fact that Wednesday is a trading holiday due to Moharram could mean more volatility on Thursday, when the weekly options of the index expire, said sales traders. 

However, the bullishness is still quite persistent when it comes to the monthly derivatives series, analysts said. Deep out-of-the-money call options of the Nifty 50 have been bought as participants expect the index to test levels of 25000 and beyond due to the Budget. 

The long short ratio recovered marginally to 80% on Monday from 79% on Friday as foreign investors are adding more long positions relative to short positions in index futures, according to analysts. The July futures of the Nifty 50 closed at a premium of 28.1 points to the spot index while open interest in the contract rose 1.5% to 14.5 mln, suggesting an increase in bullish bets. 

Equity investors are hopeful of government measures to boost the economy, including those to push consumption, while continuing the focus on capital expenditure for manufacturing and infrastructure development, among others. Thus, some cyclical sectors such as defence also continued to see addition of long positions today. 

--Nifty 50 Jul closed at 24641.10, up 19.40 points; 

--Nifty 50 Aug closed at 24750.00, up 13.70 points; 137.00-point premium to spot index

--Nifty 50 Sep closed at 24881.05, up 21.65 points; 268.05-point premium to spot index

Vedanta, Reliance Industries, Bajaj Auto, ICICI Bank, Hindustan Aeronautics, HDFC Bank, State Bank of India, Infosys, Coal India, Asian Paints, Vodafone Idea, Bharti Airtel, Bhandhan Bank, and Hindustan Unilever were among the most actively traded contracts.  End

Edited by Vandana Hingorani

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