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Informist, Thursday, Sep 5, 2024

By Anjana Therese Antony

MUMBAI – The Nifty 50 options weekly expiry day saw traders exit some of their long positions as the domestic stock market declined for the second straight day. Analysts said the current weakness may persist for a couple of days more as valuations remain stretched and global woes about a likely recession in the US have not settled yet. "The global macro uncertainties appear to be coming at a time when Indian equity valuations have been expensive," SBI Mutual Fund said in its market outlook report for September.

In the absence of major domestic triggers, all eyes will be on the movements in global markets. The interest rate decision of the US Federal Reserve, due on Sep 18, is the much awaited event for global investors, with the apex bank widely expected to cut rates this time, as hinted in its previous meeting.

Weak economic data from the US released recently, including the manufacturing Purchasing Managers' Index and employment reports, have raised concerns that the economy might be falling into a recession. Investors have been aggressively tracking economic data from the US to give clues on the degree and direction of interest rates in the world's largest economy. 

Today, the Nifty 50 and the BSE Sensex closed 0.2% lower each at 25145.10 points and 82201.16 points, respectively. The near-term support for the Nifty 50 remains at 25000 points and resistance is seen in the range of 25300-25350 points, according to three technical and derivatives analysts at different broking firms. 

Premiums on call options in the range of 25200-25400 strikes expiring next week declined 14-27% and those on 25200-25000 puts fell 9-18%. The 25150 strike of call and put expired today had the highest addition of open interest. 

The September futures contract of the Nifty 50, which stayed higher for most of the day, fell towards the end of trading hours and open interest fell over 1% to 15.08 mln. Foreign investors have increased their short positions in index futures to 32% as of Wednesday from 30% on Tuesday, a technical and derivatives analyst said. They added more than 12,000 short positions and exited around 6,600 short positions on Wednesday.

However, the current selling pressure is not anticipated to last longer, according to analysts. The market is expected to move in a small range till the outcome of the Federal Open Market Committee's meeting. Thereafter, the Indian market is expected to make gains, backed by strong macroeconomic fundamentals, as per research analysts. "We remain of the view that increasingly the market will become more discerning and move back towards companies which have strong business models, long-term earnings growth visibility and sustainable cashflows" according to the report by SBI Mutual Fund.

--Nifty 50 Sep closed at 25235.00, down 12.80 points; 89.90-point premium to spot index

--Nifty 50 Oct closed at 25371.50, down 6.65 points; 226.40-point premium to spot index

--Nifty 50 Nov closed at 25492.00; down 2.60 points; 346.90-point premium to spot index

Reliance Industries, HDFC Bank, Titan Co, Biocon, ICICI Bank, Indian Oil Corp, Hindustan Aeronautics, Infosys, Bharat Electronics, ACC, State Bank of India, and Bharti Airtel were among the most-actively traded contracts. End

Edited by Vidhi Verma

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