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Informist, Wednesday, Oct. 23, 2024

By Anjana Therese Antony

MUMBAI – Persistent foreign outflow, some downgrades in earnings estimates and stock ratings of companies following weak September quarter earnings, and expensive valuations have been pushing traders to place more short bets in Nifty 50's option chain. Traders remain indecisive about the market's direction Thursday following a day of muted movement. Premiums across call and put options expiring Thursday plunged as the 50-stock index declined for the fourth consecutive week, falling nearly 7% during this time period. 

Experts had forecasted a further slowdown in earnings growth for mid- and large-cap Indian companies in Jul-Sept, particularly due to fading benefits of lower raw material prices and weak or slowing demand in several sectors. Some even expect the returns from the Indian equity market to be comparatively less than how it was 2-3 years ago. 

The Nifty 50 and the BSE Sensex ended 0.2% lower each at 24435.50 points and 80081.98 points, respectively. The near-term support for the 50-stock index is seen at 24200-24000 points and resistance at 24500-24700 points. Though indices managed to recover opening losses during the day, they failed to retain momentum and again fell into losses. Some technical and derivatives analysts see the index falling below the crucial 24000 mark in the near term.

Premiums on 24450-25000 call options of Nifty 50 declined 49-87% and those on 24400-23800 put contracts fell 24-71%. The highest open interest addition was at 25000-point call and 24200-point put options. Foreign investors are increasingly adding short positions in index futures, which has also been a worry for market participants. Some analysts said this trend may continue in the short term, until market participants get a positive trigger to turn bullish. 

Foreign institutional investors have been net sellers in the cash market for at least 17 sessions now, offloading shares worth a whopping INR 1.03 tln during this time period. They have net sold shares worth $8.81 billion so far in October, but net purchased equities worth $23.58 billion so far in 2024, according to data on the National Securities Depository. 

--Nifty 50 Oct closed at 24487.90, down 50.40 points; 52.40-point premium to spot index

--Nifty 50 Nov closed at 24616.10, down 57.05 points; 180.60-point premium to spot index

--Nifty 50 Dec closed at 24775.00, down 56.85 points; 339.50-point premium to spot index

HDFC Bank, Bajaj Finance, Coforge, Reliance Industries, ICICI Bank, TVS Motor Co., IDFC First Bank, Persistent Systems, Mahindra & Mahindra, State Bank of India, Dixon Technologies India, Adani Enterprises, Bajaj Auto, and Hindustan Aeronautics were the most-actively traded contracts.  End

Edited by Tanima Banerjee

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