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Informist, Thursday, Aug 8, 2024

By Anjana Therese Antony

MUMBAI – As the sell-off in most global markets was mirrored in the Indian equity market today, traders sold call options of the benchmark Nifty 50 in anticipation of the weakness to persist. The weekly expiry of options contracts also added to the volatility, analysts said, with premiums on out-of-the-money calls falling and those on a few puts rising. 

Though the Reserve Bank of India today kept the repo rate of 6.50% unchanged for the ninth time and retained the stance of 'withdrawal of accommodation', analysts said there was a slight tone of caution in the central bank's approach. The RBI governor said inflation is moderating, but at a slower pace, which raised concerns about whether the central bank will consider a rate cut in the coming meetings.

This is the second consecutive time that two external members of the policy committee, Jayanth Varma and Ashima Goyal, voted to reduce the repo rate by 25 basis points and change the stance to 'neutral'. Investors turned hopeful of a change in the RBI's stance when these two members voted for the same revision last time.

The Nifty 50 and BSE Sensex closed 0.7% lower each at 24117 points and 78886.22 points, respectively. The support for the 50-stock index is pegged at 24000-23900 points and resistance at 24300-24500 points.

Premiums on call options in the range of 24200-25500 strikes of the Nifty 50 expiring next week declined 46-50%, while those on 24200-23000 puts rose 45-79%. The maximum open interest addition is at 25500-point call and 22500-point put. 

On the futures front, the August series of the Nifty 50 closed over 1% lower at 24120 points, but was at a 3-point premium to the spot level. Traders exited some of their long positions, with open interest falling over 2% to 12.46 mln.

Foreign investors continued to unwind some of their long positions in index futures on Wednesday, indicating their bearish approach towards the domestic market. They exited more than 5,000 longs and added over 9,600 shorts in index futures on Wednesday. In the cash market, they were net sellers in seven out of the last eight trading sessions. 

--Nifty 50 Aug closed at 24120, down 246.45 points; 3-point premium to spot index

--Nifty 50 Sep closed at 24265, down 234.25 points; 148-point premium to spot index

--Nifty 50 Oct closed at 24395, down 225.50 points; 278-point premium to spot index

HDFC Bank, Tata Motors, Reliance Industries, ICICI Bank, Infosys, State Bank of India, Bharat Forge, Adani Enterprises, Bharti Airtel, Axis Bank, Lupin, ABB India, Voltas, ITC, Tata Consultancy Services, Tata Power, Vedanta, and Coal India were among the most-actively traded underlying contracts. End

Edited by Vidhi Verma

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