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Informist, Friday, Aug 9, 2024

By Anjana Therese Antony

MUMBAI – Traders began placing bullish bets in the benchmark Nifty 50's options today, tracking positive sentiment in the global market after a decline in the US weekly unemployment claims. The unemployment claims data provided some relief over fears of a likely recession in the US. Premiums on some out-of-the-money calls expiring on Thursday rose today, while those across puts declined sharply. 

"... the overall OI (open interest) data suggests a positive bias, supported by strength in the Midcaps," Kotak Securities said in an intraday note today. Although follow-through buying has been subdued, the overall setup leans towards a potential upside, it added. 

However, from a fundamental perspective, some analysts believe that it is too early to conclude that the situation has improved on the global front. "It will be premature to conclude from just one (US unemployment) data that global uncertainties, especially in the US, are settled. We need to wait a bit more before jumping to conclusions," a research analyst at a domestic broking firm said.

This week, most global stock markets saw sharp losses after data showed that employment in the US was falling, igniting worries that the world's largest economy was falling into a recession. This also cemented the hope of a rate cut by the US Federal Reserve in its next monetary policy meeting. Investors have been tracking global markets in the absence of strong domestic cues. With the June quarter earnings season ending next week, investors are likely to keep tracking foreign markets for cues.

Today, the Nifty 50 and Sensex closed over 1% higher each at 24367.50 points and 79705.91 points, respectively. The near-term support for the index is pegged in the range of 24200-24100 points and resistance at 24500 points. 

On the calls side of the Nifty 50, premiums on 24300-24900 strikes rose 19-73%. The 25000 strike has the maximum open interest addition as well as open interest concentration. Premiums on out-of-the-money puts in the range of 24300-23500 strikes declined 61-77%. 

Despite the gains in the cash market, some long unwinding was seen today in the futures segment. Open interest in the August series declined 3.3% and that in the September contract fell 8.4%. Analysts said foreign investors unwinding their long positions in index futures is a concern now. They exited over 32,000 long positions in index futures on Thursday and added over 17,000 shorts.

FIIs' short positions increased to 49% on Thursday from 43% on Monday, indicating the increasingly bearish approach towards the domestic market. Also, they have been net sellers in the cash market for five straight sessions till Thursday. 

--Nifty 50 Aug closed at 24404.00, up 267.45 points; 36.50-point premium to spot index

--Nifty 50 Sep closed at 24539.00, up 267.00 points; 171.50-point premium to spot index

--Nifty 50 Oct closed at 24654.50, up 248.70 points; 287.00-point premium to spot index

Trent, HDFC Bank, State Bank of India, Reliance Industries, Tata Motors, ICICI Bank, Siemens, Grasim Industries, ABB India, Zydus Lifesciences, Steel Authority of India, Eicher Motors, Infosys, Alkem Laboratories, and Asian Paints were among the most-actively traded underlying contracts.  End

Edited by Aditya Sakorkar

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