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Informist, Wednesday, Aug 28, 2024

By Anshul Choudhary

MUMBAI – Options data show the Nifty 50 may consolidate on Thursday, which is also the day of expiry of monthly derivatives contracts. The Nifty 50 today rose to a fresh lifetime high, which pushed traders to add long positions at higher levels and even cover short bets. However, some of these long positions were closed after the spot market saw profit booking in the final hour, analysts said.

There was some caution after the Nifty 50 gained for the 10th straight session to close at 25052.35 points, rising over 900 points during this period. "I don't want to get into guessing the upside right now," the head of derivatives research at a top brokerage said.

Other analysts are also conservative in their view. "Index may consolidate on expiry...writers were active at 25100 puts and calls, and this level will be difficult to breach tomorrow (Thursday)," Deven Mehta, technical and derivatives analyst at Choice Equity Broking, said.

Having said that, analysts are of the view that bullish sentiment is still present and the Nifty 50 can move higher after a short consolidation phase. Expectations of rate cuts in the US in September, better earnings growth for Indian companies in the second half of this financial year, and strong domestic flows are some of the major factors leading to the positive momentum in the equity market.

In the case of call options expiring on Thursday, the highest open interest addition was seen at 25100 strike price, followed by 25400 strike price. Traders bought in-the-money call options but sold at-the-money and out-of-the-money calls.

On the put side, traders continued to sell puts across the board as the Nifty 50 treaded higher. The maximum open interest was seen at 25000 strike price, followed by 24800 strike price. These levels are likely to act as immediate supports.

The August futures contract of the Nifty 50 closed at a premium of 2.65 points to the spot index. Open interest in the contract rose 2% to 8.19 mln, according to provisional data. At the same time, open interest in September futures was up 51% to 8.86 mln.

--Nifty 50 Aug closed at 25055.00, up 37.30 points

--Nifty 50 Sep closed at 25173.00, up 39.30 points; 120.65-point premium to spot index

--Nifty 50 Oct closed at 25290.00, up 41.00 points; 237.65-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, Infosys, State Bank of India, Bharti Airtel, ITC, Axis Bank, IndusInd Bank, Adani Enterprises, InterGlobe Aviation, LTIMindtree, and Kotak Mahindra Bank were among the most actively traded contracts.  End

Edited by Ashish Shirke

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