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Informist, Tuesday, Jul 30, 2024

By Anshul Choudhary

MUMBAI – Traders sold call and put options amid uncertainty over the Nifty 50's movement ahead of the outcome of the Federal Open Market Committee meeting on Wednesday. The Nifty 50 is expected to face resistance at higher levels after sharp gains in recent weeks, which pushed traders to sell out-of-the-money call options.

Today, the bulls attempted to push the Nifty 50 above the psychological barrier of 25000 points but fell short by a few points. The 50-stock index touched an intraday high of 24971.75 points before coming off highs to end the session 0.1% higher at 24857.30 points.

The US Federal Reserve is widely expected to keep its key interest rates unchanged at 5.25-5.50% on Wednesday. However, analysts would be keenly listening to commentary for any signs of interest rate cuts in the upcoming September meeting. With recent data showing inflation in the US is coming down, and even the labour market has slowed down, it is widely expected the central bank may cut rates in September. The CME FedWatch Tool shows a 90% probability of a 25-basis-point rate cut at the September meeting.

For the Nifty 50 options contracts expiring this week, traders sold out-of-the-money call options amid expectation of profit booking at higher levels. However, sentiment has not turned bearish yet and traders continue to buy in-the-money calls. Options data shows traders have even covered their short positions at 24500-24750 calls.

The maximum addition of open interest was at 24900 calls, while the maximum open interest was at 25000-25200 calls. Analysts expect the 25000 points to continue to act as a major resistance for the Nifty 50.

On the put side, premiums were down across strike prices. Premiums at 24500 puts fell 10 rupees to 12.85 rupees, and those of 24800 fell 34 rupees to 62 rupees. The maximum open interest on the put side was at 24500 strike prices, while the maximum open interest addition was at 24900 strike prices.

The August futures contract of the Nifty 50 closed at a premium of 75.20 points to the spot index. Open interest in the contract rose 2.8% to 14.73 mln, according to provisional data.

--Nifty 50 Aug closed at 24932.50, up 22.05 points; 75.20-point premium to spot index

--Nifty 50 Sep closed at 25055.00, up 30.30 points; 197.70-point premium to spot index

--Nifty 50 Oct closed at 25165.00, up 6.80 points; 307.70-point premium to spot index

HDFC Bank, ICICI Bank, Tata Motors, Indian Oil Corp, Dixon Technologies, State Bank of India, Hindustan Aeronautics, Axis Banks, Bharat Electronics, and Hindustan Petroleum were among the most actively traded underlying contracts.  End

Edited by Deepshikha Bhardwaj

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