More Stories

Informist, Tuesday, Aug 20, 2024

By Apoorva Choubey 

MUMBAI – Positioning in the current weekly options of the Nifty 50 suggests that Indian shares could sustain their recent uptrend as hopes of an interest rate cut by the US Federal Reserve next month have brought back risk appetite across most global markets, leading to gains in headline indices for the fourth straight session today. Many call writers squared off their bearish bets in the Nifty 50's weekly options expiring Thursday, and put writers continued selling. 

This indicates that some participants likely expect the index to inch higher, but gains could be capped as suggested by the selling in some deep out-of-the-money call options, according to derivatives analysts. In futures, foreign investors could have unwound some bearish bets in index and stock futures today after being bearish in recent days, while high net worth and retail investors remain bullish, they said. 

The Nifty 50 and Sensex gained today, tracking the rise in some Asian indices. Most global indices have rebounded and managed to recoup some losses made so far in August, but some investors still aren't taking very aggressive bullish or bearish bets 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. 

The speech is expected to 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. It still remains to be seen if the US central bank will cut interest rates at the pace that global markets are pricing in, especially in the backdrop of persisting geopolitical tensions in West Asia and the Bank of Japan raising rates, a dealer at a mutual fund house said. Some cues will also be taken from the release of the minutes of the US Fed's latest meeting, he said.     

Premiums of the Nifty 50's weekly put options fell 13-78%, with the most actively sold were the 24600 and 24700 strike price put options. Among call options, most strikes saw closure of short bets but some deeper out-of-the-money strikes were sold. The 24750 and the 24800 strike price call options saw the maximum volumes. 

The options market signals a bullish outlook, with increased put writing compared to calls, analysts at SAMCO Securities said in a note today. The Put-Call Ratio has risen from 0.99 on Monday to 1.13, indicating positive sentiment, they said. 

The Nifty 50 closed 0.5%, or 126.20 points, higher at 24698.85 points today. The August futures of the Nifty 50 ended at a premium of 8.15 points to the spot index. Open interest in the contract rose 0.4% to 11 mln, according to provisional data.

Among others, the futures of financial services and information technology stocks were bought as was the Nifty Bank index's August contract. 

--Nifty 50 Aug closed at 24707.00, up 111.25 points 

--Nifty 50 Sep closed at 24837.00, up 113.50 points; 138.15-point premium to spot index

--Nifty 50 Oct closed at 24965.40, up 115.85 points; 266.55-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, Tata Motors, ICICI Bank, Bajaj Finance, Kotak Mahindra Bank, Polycab India, State Bank of India, Hindustan Aeronautics, Tata Consultancy Services and Voltas were among the most actively traded underlying contracts.  End

Edited by Deepshikha Bhardwaj

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.