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Informist, Monday, Aug 26, 2024

By Apoorva Choubey

MUMBAI – Growing expectations of an interest rate cut by the US Federal Reserve in September prompted the addition of long bets in the August futures of some information technology companies and closure of short bets in others. Most global equities rose today after Fed Chair Jerome Powell's speech at the annual economic symposium at Jackson Hole on Friday, where he said the "time has come" for interest rate cuts.

India's headline indices also gained significantly, driven by IT and metal sectors. Lower interest rates in the world's largest economy are expected to bring back discretionary IT spending, especially from banking and financial services and other cyclical sectors, which is seen as beneficial for software service providers.

Open interest in the August futures of Tata Consultancy Services, Tech Mahindra, and Infosys jumped 2-14.6% as bullish positions were added. The open interest in the futures of HCL Technologies and Wipro fell 4-11% as short bets were squared off. These stocks closed 1-3.5% higher in the spot market.

Meanwhile, the Nifty 50 monthly call options were bought while the sell-off in the put options continued, as the index is seen extending its rally this week, dealers said. The index closed above the psychologically important 25000-point mark today, following gains in global peers. 

Traders bought the 25100 and 25200 strike price call options of the Nifty 50 aggressively, indicating that the index is seen testing these levels soon, according to derivatives analysts. These strikes remain the most actively traded among call options. The 25000 and 24900 strike price put options were the most actively sold. 

Today, the 50-stock index closed at 25010.60 points, up 187.45 points or 0.8% from the previous close. The August futures of the benchmark closed at a premium of 34.40 points to the spot index. Open interest in the contract fell 0.5% to 10.9 mln, according to provisional data.

The benchmark index closed higher for the eighth straight session today. Recent data in the world's largest economy has fuelled optimism that the Fed will have to cut rates sooner than later, which is a positive for global liquidity and risky assets such as emerging market equities.

The Nifty 50 is now only 68 points away from its all-time high. Valuations in the large-cap space are comfortable and the Nifty 50 is currently trading at 18.9 times its one-year forward earnings per share multiples, which is nearly at a par with the 15-year average of 19 times, noted Vikram Kasat, head of advisory at Prabhudas Lilladher. With expectations of strong festival season demand, rural economic revival and interest rate cuts will provide support to markets despite periods of consolidation, he said.

--Nifty 50 Aug closed at 25045.00, up 191.00 points

--Nifty 50 Sep closed at 25165.95, up 200.30 points; 155.35-point premium to spot index

--Nifty 50 Oct closed at 25285.00, up 192.65 points; 274.40-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, Infosys, Tata Consultancy Services, Vedanta, Larsen & Toubro, Tata Motors, Bharti Airtel, Axis Bank, Kotak Mahindra Bank, Vodafone Idea, InterGlobe Aviation and Hindustan Aeronautics were among the most actively traded contracts.  End

Edited by Rajeev Pai

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