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Informist, Monday, Sep 16, 2024

By Anjana Therese Antony

MUMBAI – Though the Indian equity market closed slightly higher today, traders sold deep out-of-the-money options of the index, hinting at indecisiveness about the market's direction on Tuesday. Now that the market has factored in a 25-basis-point reduction in key interest rate in the US, analysts believe investors in India will continue to take cues from global markets to make investment decisions, particularly till the US Federal Reserve's policy announcement on Wednesday.

While the medium-term bias in the domestic stock market is positive, analysts see periodic corrections, especially as valuations remain expensive. Among other factors that could limit the market's upside is extensive rain which could push food inflation higher, experts said.

"Overall, we are bullish on Nifty index and suggest traders to maintain buy on dips trading approach till it is trading above 24850 levels on closing basis. On the higher side, immediate resistance is placed around 25650 levels," Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said. Today, the Nifty 50 hit a record closing as well as intraday high of 25383.75 points and 25445.70 points, respectively. 

Premiums on call options of the Nifty 50 expiring Thursday declined 9-35% for 25600-26100 strikes, while those on 25350-24700 put contracts fell 39-44%. Meanwhile, premiums on 25400-25500 call options rose 62-109%. The highest open interest addition is at 25800-strike call and 25150-point put options. Traders also exited some long positions on the futures front, with the open interest of the September series falling 1.6% to 14.18 mln.

Also, foreign investors increased their long positions in index futures to 67% on Friday, compared to 66% on Thursday. This indicates that the bearish approach towards the Indian market ahead of the Fed's policy announcement is fading, though they may not place aggressive bets before the interest rate outcome, analysts said. 

--Nifty 50 Sep closed at 25434.80, up 62.20 points; 51.05-point premium to spot index

--Nifty 50 Oct closed at 25562.00, up 66.85 points; 178.25-point premium to spot index

--Nifty 50 Nov closed at 25672.80; up 57.35 points; 289.05-point premium to spot index

Dixon Technologies, Bajaj Finance, Vedanta, HDFC Bank, LIC Housing Finance, ICICI Bank, Bajaj Finserv, Reliance Industries, State Bank of India, Multi Commodity Exchange, Axis Bank, Hindustan Unilever, NTPC, Tata Steel, and Samvardhana Motherson International were the most-actively traded contracts.  End

Edited by Aditya Sakorkar

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