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Informist, Monday, Sept. 30, 2024

By Anjana Therese Antony

MUMBAI – The sharp fall of the benchmark Nifty 50 index Monday prompted traders to buy out-of-the-money put options in anticipation of more downside. However, they sold deep out-of-the-money put contracts, which suggests that the short-to-medium term outlook towards the Indian stock market remains positive, backed by strong corporate earnings, robust festival demand, foreign fund inflows, and pickup in private capital expenditure, analysts said. 

A sharp fall is unlikely in the short term, though stretched stock valuations could keep gains under check, research analysts at two broking firms said. The sharp fall Monday comes after a week of bull run led by the sharper than expected rate cut by the US Federal Reserve, economic stimulus announced by China, and foreign fund inflows. Analysts said the correction was anticipated, especially as stock valuations remain expensive and as the benchmark indices hit fresh record highs every day the previous week.

The Nifty 50 closed 1.4% lower at 25810.85 points and the BSE Sensex ended 1.5% lower at 84299.78 points. The short-term support for the 50-stock index is pegged at 25700-25600 points and resistance at 26000 points, according to technical and derivatives analysts at three domestic broking firms.

Premiums on 25800-25200 call options of the Nifty 50 expiring Thursday rose 12-307%, while those on 25900-26200 call contracts declined 75-85%. The maximum open interest addition was at 26000-point call and 23050-point put options.

The bearishness among foreign investors is also expected to weigh on the market in the near term, as they were net sellers in the cash market for two straight sessions. Monday, they offloaded shares worth 97.92 bln rupees, according to data on the National Stock Exchange, BSE, and Metropolitan Stock Exchange of India. However, they increased their long positions in index futures to 81% on Friday from 75% on Sep 23. Analysts said they expect the long-term growth prospects of India to attract more foreign inflows in the coming months.

--Nifty 50 Oct closed at 25990.00, down 355.15 points; 179.15-point premium to spot index

--Nifty 50 Nov closed at 26115.00, down 344.15 points; 304.15-point premium to spot index

--Nifty 50 Dec closed at 26235.00, down 329.10 points; 424.15-point premium to spot index

Reliance Industries, HDFC Bank, ICICI Bank, State Bank of India, Axis Bank, Tata Steel, Adani Enterprises, Vedanta, NTPC, Infosys, NMDC, Kotak Mahindra Bank, Mahindra & Mahindra, Tata Motors, Bharat Electronics, Hero MotoCorp, and GAIL India were the most-actively traded contracts.  End

Edited by Ashish Shirke

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