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Informist, Tuesday, Sep 17, 2024

By Anjana Therese Antony

MUMBAI – The options chain of the Nifty 50 hinted that the index may continue to move in a thin range on Wednesday, in the absence of domestic triggers, and as the market has largely factored in a possible 25-basis-point rate cut in the US, analysts at different broking firms said. Premiums across call and put options of the 50-stock index declined for the second straight session today ahead of the US policy outcome on Wednesday. 

Investors await the US Federal Reserve's policy meeting outcome after Indian market hours on Wednesday. A section of the market is anticipating a 50-bps cut this time, in which case the Indian market may rise at a faster pace, analysts said.

The CME FedWatch Tool shows a 67% possibility of a 50-bps cut on Wednesday, compared to the 59% on Monday. However, if the Fed decides not to cut rates at all, some analysts see the domestic market falling about 2-3% on Thursday. 

The monetary policy decisions in the US are widely tracked by investors in India as lower rates could lead to a weak dollar and bring more foreign funds to the domestic market, a research analyst at a domestic broking firm said. This will also provide some relief for Indian companies having exposure in the US, such as information technology and pharmaceuticals, as it could increase their clients' discretionary spending. 

Today, as widely expected by analysts, the Indian stock market moved in a tight range and closed slightly higher. Expensive valuations have been acting as a barrier to the market's upside in the short term. The Nifty 50 and BSE Sensex ended 0.1% higher each at their record closing highs of 25418.55 points and 83079.66 points, respectively.

The support for the 50-stock index is seen at 25380-25370 points and resistance at 25450-25500 points for Wednesday, technical and derivatives analysts at two broking firms said. 

In the options chain of the index, premiums on 25450-26500 call options expiring Thursday fell 9-18% and those on 25400-25000 put contracts declined 8-9%. The maximum open interest addition was at 26000-point call and 25400-point put contracts. Traders also exited some long positions in futures contracts, with open interest in the September series falling 0.5% to 13.92 mln. 

Though there is slight caution ahead of the Fed's meeting, foreign investors have been increasing their long positions in index futures. On Monday, they increased their long positions in index futures to 68% from 67% on Friday and from 66% on Thursday. 

--Nifty 50 Sep closed at 25448.00, up 5.25 points; 29.45-point premium to spot index

--Nifty 50 Oct closed at 25572.00, up 6.80 points; 153.45-point premium to spot index

--Nifty 50 Nov closed at 25686.95; up 4.30 points; 268.40-point premium to spot index

Tata Motors, HDFC Bank, Dixon Technologies, Hindustan Aeronautics, ICICI Bank, Bajaj Finance, Mahanagar Gas, Samvardhana Motherson International, Hero MotoCorp, State Bank of India, Biocon, Vedanta, Punjab National Bank, REC, Reliance Industries, Axis Bank, and Bajaj Auto were the most-actively traded contracts.  End

Edited by Aditya Sakorkar

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