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Informist, Tuesday, Sep 24, 2024

By Anjana Therese Antony

MUMBAI – The options chain of the benchmark Nifty 50 index indicates that traders are not clear about the market's direction on Wednesday after the index closed largely unchanged today. Analysts said the degree of call writing was higher than puts and premiums declined across option contracts of Nifty 50. While some expect the current rally to extend to Wednesday at a slower pace, others believe the market will take a breather and fall slightly amid expensive valuations. 

The US rate cut-led cheer seems to be waning, with investors looking to book more profits in the near term after the benchmark indices hit fresh record highs today, a research analyst at a domestic broking firm said. While the medium-term growth of equities looks positive, stretched valuations and the absence of strong triggers could lead to muted gains and periodic corrections, analysts at three domestic broking firms said. 

"At this juncture, we believe that risk-reward is relatively more favourable in large-cap stocks as compared to small-cap/micro-cap stocks. Moreover, we see quality doing better than growth or momentum stocks over the next few months," Sharekhan said in its strategy report. 

Today, benchmark stock indices closed largely unchanged after hitting fresh record highs. The Nifty 50 ended at its record closing high of 25940.40 points and the BSE Sensex closed at 84914.04 points. The immediate support for the 50-stock index is pegged at 25870-25850 points and resistance at 26000 points for Wednesday. 

Premiums on 26000-27000 call options of the index expiring Thursday fell 12-45% and those on 26000-25000 put contracts declined 27-63%, indicating that major gains or losses are not expected till the weekly expiry of these contracts. The maximum open interest addition was at 26000-point call and 25900-point put options. The September contract of the index closed 0.2% higher, but open interest fell 21.3% to 9 mln.

The increasing optimism of foreign investors is being considered as a good sign for the Indian stock market. On Monday, FIIs increased their long positions in index futures to 75% from 68% on Sep 16. 

--Nifty 50 Sep closed at 25956.00, up 38.15 points; 15.60-point premium to spot index

--Nifty 50 Oct closed at 26094.00, up 50.15 points; 153.60-point premium to spot index

--Nifty 50 Nov closed at 26185.00, up 41.05 points; 244.60-point premium to spot index

HDFC Bank, ICICI Bank, Bajaj Finance, Reliance Industries, State Bank of India, Indian Energy Exchange, Tata Steel, Infosys, Vedanta, Axis Bank, Bharti Airtel, Mahindra & Mahindra, and Adani Enterprises were the most-actively traded contracts.  End

Edited by Saji George Titus

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