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Informist, Tuesday, Oct. 8, 2024

By Anshul Choudhary

MUMBAI – Options data suggest traders are cautious about Wednesday's session despite some expectations that the Reserve Bank of India's Monetary Policy Committee may ease its stance to "neutral". Traders sold out-of-the-money call options as concerns over outflows by foreign investors have not abated totally.

"I read today's (Tuesday's) gains as some respite due to oversold conditions... it's too early to comment on the market's direction, but we may not see any sharp recovery for some time," Raj Deepak Singh, derivatives analyst at ICICI Direct Research, said.

Indices in India saw a sharp fall last week as foreign investors sold Indian equities to buy stocks in China on hopes of more stimulus measures from Beijing. However, analysts were disappointed after China's National Development and Reform Commission Tuesday failed to provide details of fiscal measures.

Any disappointment from China may work in favour of Indian equities and foreign investors may begin buying stocks again, analysts said. These developments are likely to have given traders some comfort that benchmark indices may not see a sharp fall in the coming sessions and may even post slight gains. The Nifty 50 rose nearly 1% to close at 25013.15 points after declining over 5% in the previous six sessions.

Traders bought in-the-money and at-the-money call options with significant addition of open interest at 25000-25200 strike prices. At the same time, they sold call options above 25250 strike prices.

Tuesday's rise pushed traders to sell put options across the board. The highest addition of open interest was seen at 25000 puts, followed by 24000 puts. The premiums of most active put contacts declined 50%-70%.

The October futures contract of the Nifty 50 closed at a premium of 135.05 points to the spot index. Open interest in the contract rose 4.4% to 14.44 million, according to provisional data.

--Nifty 50 Oct closed at 25148.20, up 162.65 points

--Nifty 50 Nov closed at 25280.00, up 153.15 points; 266.85-point premium to spot index

--Nifty 50 Dec closed at 25440.00, up 158.95 points; 426.85-point premium to spot index

HDFC Bank, Reliance Industries, Dixon Technologies, ICICI Bank, Trent, Tata Motors, Infosys, Mahindra & Mahindra, Adani Enterprises, State Bank of India, and Tata Steel were the most actively traded contracts.  End

Edited by Rajeev Pai

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