Equity Futures
Deep out-of-the-money Nifty 50 calls sold before US CPI
This story was originally published at 20:49 IST on 10 September 2024
Register to read our real-time news.Informist, Tuesday, Sep 10, 2024
By Anjana Therese Antony
MUMBAI – Traders bought Nifty 50 call options which are close to the spot level, but sold deep out-of-the-money contracts ahead of the US inflation data, due Wednesday, indicating that major upside is not seen for the index. They bought some calls close to the spot level, indicating that the bias towards the domestic market may remain bullish in the next session, though the upside might be capped, analysts said.
The inflation data gains prominence amid divided views about the degree and direction of interest rates in the US. Though the domestic equity market is expected to extend gains for the third straight session on Wednesday, analysts said the caution is likely to keep the upside limited.
Recent worries about a likely recession in the US had raised hopes about a rate cut in the world's largest economy, though views are divided about whether the US Federal Reserve will reduce key rates by 25 basis points or 50 bps. The CME FedWatch tool shows a 71% probability of a 25-bps cut in the US Fed's meeting next week and 29% probability of a 50-bps reduction.
From a medium-to-long-term perspective, experts believe the strong growth prospects of India could keep investors attracted to the market and retain the country's position as a strong emerging market. This will be supported by better rural demand trends, government capex, robust corporate earnings, slowing inflation, and reduction in interest rates, they said.
Today, the Indian equity market closed higher, led by gains in pharmaceutical and information technology stocks. The Nifty 50 and the BSE Sensex closed 0.4% higher each at 25041.10 points and 81921.29 points, respectively. The support for the 50-stock index is pegged at 25000-24950 points and resistance at 25150-25200 points for the near term.
In the options chain of the Nifty 50, premiums on 25050-25100 strikes of calls expiring Thursday rose 14-22%. Meanwhile, premiums on 25350-25600 calls declined 30-37% and those on 25000-24750 puts fell 60-78%. The maximum open interest addition is at 25100-point call and 25000-point put.
On the futures front, the September contract of the Nifty 50 closed 0.5% higher. However, traders exited some positions, with open interest declining 3% to 13.29 mln.
--Nifty 50 Sep closed at 25097.00, up 112.00 points; 55.90-point premium to spot index
--Nifty 50 Oct closed at 25224.00, up 110.50 points; 182.90-point premium to spot index
--Nifty 50 Nov closed at 25355.00; up 117.70 points; 313.90-point premium to spot index
HDFC Bank, ICICI Bank, Tata Power Co, Reliance Industries, State Bank of India, Divi's Laboratories, Axis Bank, Infosys, Bajaj Finance, Coforge, Bharti Airtel, Tata Consultancy Services, Tata Motors, Power Finance Corp, REC, Hindustan Aeronautics, and Dixon Technologies were the most-actively traded contracts. End
Edited by Manisha Baxla
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.
To read more please subscribe
Share this Story:
