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Informist, Monday, Aug 19, 2024

By Apoorva Choubey 

MUMBAI – The Nifty 50 could move in a narrow range over the next few sessions, if one were to go by the writing seen in the index's call and put options of the weekly series expiring Thursday. Traders sold out-of-the-money call and put options of the Nifty 50 across the board today, as investors are expected to stay in a wait-and-watch mode ahead of US Federal Reserve Chair Jerome Powell's speech later this week at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming.

While most global indices gained on Friday and managed to recoup some losses made so far in August, Powell's speech is the biggest event for investors this month as it will provide hints about the trajectory of rate cuts in the US and offer clues on the US central bank's reading of the health of the world's largest economy. The Nifty 50 and Sensex were choppy today after opening marginally higher, while global markets were mixed. 

"Some participants could be deploying a "short strangle" strategy as they expect market to be range-bound before Powell's speech on Friday," said a derivative trader at a bank-sponsored brokerage house. A short strangle involves selling an out-of-the-money put option and an out-of-the-money call option simultaneously, typically used in a lacklustre market when the underlying is expected to be less volatile. 

Premiums on the Nifty 50's weekly calls fell across the options chain, but the most actively sold were the 24600 and 24700 strike price call options. Among put options, out-of-the-money strikes saw addition of short bets, while in-the-money strikes saw mixed action. The 24500 and 24550 strike price put options saw the maximum volumes.

The Nifty 50 closed 0.1%, or 31.50 points, higher at 24572.65 points. Markets moved in a narrow range due to thin participation from traders on account of Raksha Bandhan, said Prashanth Tapse, senior vice president of research at Mehta Equities. "Investors will be keenly watching the Jackson Hole Economic Symposium on Friday, as there are hopes that the Fed could set the stage for the first rate cut after last week's data on inflation which eased to 3%," he said. 

The index will find stiff resistance at 24700 points, followed by 24800, according to Osho Krishan, senior analyst - technical and derivatives, Angel One. Support for the index is seen at 24390 levels, he said. 

The August futures of the Nifty 50 ended at a premium of 17.35 points to the spot index. Open interest in the contract fell 1.9% to 11.08 mln, according to provisional data.

--Nifty 50 Aug closed at 24590, up 4.50 points 

--Nifty 50 Sep closed at 24724, up 16.25 points; 151.35-point premium to spot index

--Nifty 50 Oct closed at 24855, up 26.50 points; 282.35-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, Hindustan Aeronautics, Tata Consultancy Services, ICICI Bank, Voltas, Dixon Technologies, State Bank of India, Tata Steel, and Vedanta were among the most actively traded underlying contracts.  End

Edited by Manisha Baxla

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