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Informist, Monday, Jul 29, 2024

By Anshul Choudhary

MUMBAI – Traders sold call options as the Nifty 50 faced selling pressure at higher levels after witnessing sharp gains on Friday and the past several weeks. However, traders also sold put options as they did not expect a significant fall in the Nifty 50 if profit booking intensifies.

"There was some pressure at higher levels today, but there wasn't a major short addition," Deven Mehta, derivatives analyst at Choice Equity Broking. The sentiments are still positive and traders may cover their short positions if the Nifty 50 crosses 25000 points, he said.

Today, the Nifty 50 almost breached the psychological barrier of 25000 points, rising 0.7% to its intraday lifetime high of 24999.75 points. It came off highs later amid selling in private banks, where concerns around their asset quality were still ripe. The Nifty 50 ended largely unchanged at 24836.10 points--its highest closing level yet, but just 1 point above Friday's close.

HDFC Bank, Axis Bank, and IndusInd Bank reported a sequential rise in gross non-performing assets ratio, while it has fallen for ICICI Bank. The decline in asset quality of several banks has raised concerns among investors, analysts said. This is happening at a time when private banks are still struggling to raise deposits and there is pressure from the Reserve Bank of India to control credit growth.

For the Nifty Bank options contracts expiring this month, traders sold out-of-the-money and at-the-money calls and bought in-the-money calls. On the put side, traders sold put options across the board. Attractive valuations of private banks compared to several other sectors have kept banks on the radar of investors for now. The Nifty Bank closed 0.2% higher at 51406.25 points.

For the Nifty 50 options contracts expiring this week, there was indecisiveness as traders sold call and put options. With the Nifty 50 at record highs, there are expectations that the Nifty 50 may witness profit-booking, but any fall is also seen limited on the back of strong flows from mutual funds. Options suggest the Nifty 50 may face resistance at 25000 points, where maximum open interest in call options is held. Premiums on the call side were down across strike prices.

On the put side, the maximum open interest addition was at 24000 points, followed by 24500 points. Premiums across the board were down with premiums on 24500 puts falling by 17 rupees to 19 rupees, and that of 24600 puts declining by 20 rupees to 31 rupees.  

The August futures contract of the Nifty 50 closed at a premium of 87.90 points to the spot index. Open interest in the contract rose 1.8% to 14.52 mln, according to provisional data.

--Nifty 50 Aug closed at 24924.00, up 8.55 points; 87.90-point premium to spot index

--Nifty 50 Sep closed at 25034.00, up 11.35 points; 197.90-point premium to spot index

--Nifty 50 Oct closed at 25179.00, up 33.00 points; 342.90-point premium to spot index

ICICI Bank, HDFC Bank, State Bank of India, Bharat Electronics, Axis Bank, Bandhan Bank, Punjab National Bank, REC, Vedanta, Larsen & Toubro, and Kotak Mahindra Bank were among the most actively traded underlying contracts.  End

Edited by Saji George Titus

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