More Stories

Informist, Thursday, Aug 1, 2024

By Anshul Choudhary

MUMBAI – Options data suggests the Nifty 50 is likely to move in a range after sharp gains in the past several weeks. Profit booking is likely as traders sold out-of-the-money calls but a downside from here is expected to be limited, positioning show.

Sentiments were positive as the US Federal Reserve Chair Jerome Powell on Wednesday hinted at a cut in interest rates in September. "A reduction in the policy rate could be on the table as soon as the next meeting in September," Powell said in a press conference after the Federal Open Market Committee meeting. For now, the FOMC on Wednesday kept the federal funds target rate unchanged at 5.25-5.50%, as was widely expected.

Today, the Nifty 50 opened higher after Powell's comments and crossed 25000 points for the first time. Slight profit booking was seen above that level, with the Nifty 50 coming below 25000 points briefly. However, the Nifty 50 rose again and managed to close at 25010.90 points--its highest closing level yet.

Even as valuations are on the higher side, the possibility of a rate cut in September and expectations of better earnings growth ahead are likely to keep indices high. For options contracts expiring this week, traders continue to sell put options with premiums down across the board. The maximum addition of open interest was at 24000 puts, followed by 25000 puts.

"This is a bull market...negative news is being ignored right now," Om Mehra, technical analyst with SAMCO Securities said. "The market (Nifty 50) can move to 25200-25300 from here but momentum is slowing down," he said.

Positioning the call options suggest some traders are expecting profit booking at higher levels. Traders sold out-of-the-money call options amid concerns around expensive valuations. However, they continue to buy in-the-money calls as strong inflows from mutual funds are likely to help recover from any correction.

"While the valuations of Indian markets continue to remain high, fund flows could help Nifty head even higher with some intermittent corrections," Deepak Jasani, head of retail research at HDFC Securities said in a note today. "They (retail investors) could also look at taking part profits out of stocks that have run up sharply over the last few months – much ahead of the justified valuations."

The August futures contract of the Nifty 50 closed at a premium of 25.80 points to the spot index. Open interest in the contract rose 3.7% to 15.98 mln, according to provisional data.

--Nifty 50 Aug closed at 25036.70, up 23.55 points; 25.80-point premium to spot index

--Nifty 50 Sep closed at 25149.00, up 16.05 points; 138.10-point premium to spot index

--Nifty 50 Oct closed at 25265.00, up 17.05 points; 254.10-point premium to spot index

HDFC Bank, Maruti Suzuki, Adani Enterprises, Coal India, Tata Steel, State Bank of India, Adani Ports and Special Economic Zone, Tata Motors, Sun Pharmaceuticals, Tata Power, Vedanta, and Mahindra & Mahindra were among the most-actively traded underlying contracts.  End

Edited by Vidhi Verma

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.