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Informist, Tuesday, Nov. 12, 2024

 

By Apoorva Choubey 

 

MUMBAI – Positioning in the call and put options of the Nifty Bank index's November series indicates that the sell-off in the banking sector could persist over the coming sessions. Traders sold out-of-the-money call options of the index while buying puts, at a time when short bets were added in the November futures of the Nifty Bank. 

 

Among out-of-the-money call options of the index, 53000 and 54000 strike prices were the most actively sold. These hold the maximum open interest among calls, and their premiums fell 54% and 52%, respectively.

 

The Nifty Bank index fell 1.4% Tuesday to end at 51157.80 points. Banking stocks are witnessing selling by foreign institutional investors, according to market participants.

 

Foreign investors are pulling money out of emerging markets like India not just because of the recent rise in the dollar and bond yields, but also due to the view that US President-elect Donald Trump's aggressive trade policies--while good for American corporations--could mean uncertainty for other countries and drive global inflation higher, they said.

 

The 51000 and 50000 strike price put options of the Nifty Bank were the most actively bought, suggesting that these levels are seen as the next support zones that could be tested by the index, as per analysts. These strike prices have the highest number of open positions among in-the-money put options and their premiums jumped 84% and 82%, respectively.

 

Meanwhile, traders added short positions in the banking index's November futures, which witnessed a 16% jump in open interest to 3 million. They also added bearish bets in the November futures of lenders such as HDFC Bank, Axis Bank, Kotak Mahindra Bank, and State Bank of India. 

 

Aside from the banking sector, traders sold the November futures of the Nifty 50 too. The benchmark fell for the fourth consecutive session and closed at the lowest level in nearly five months. On Tuesday, the Nifty 50 ended at 23883.45, down 257.85 points or 1.1% from the previous close.

 

Open interest in the index's November futures rose 5% to 11.8 million. The contract provisionally ended at a premium of 47.65 points to the spot index. Traders sold call options of the Nifty 50 across the options chain in the November monthly series, while buying puts, suggesting that they expect more weakness.

 

The index is expected to find support at 23800-23820 points, said Hrishikesh Yedve, a technical and derivatives analyst at Asit C. Mehta Investment Intermediates Ltd. "As long as the index remains over 23800, a short-term pullback seems possible," he said. The resistance for the index is seen at 24150 levels, analysts said. 

 

--Nifty 50 Nov closed at 23931.10, down 295.20 points;

--Nifty 50 Dec closed at 24084.95, down 293.65 points; 201.50-point premium to spot index

--Nifty 50 Jan closed at 24228.65, down 304.75 points; 345.20-point premium to spot index

 

HDFC Bank, ICICI Bank, State Bank of India, Reliance Industries, Britannia Industries, Jubilant FoodWorks, Axis Bank, Tata Motors, UPL, Hindalco Industries, NMDC, Trent, Asian Paints, and Kotak Mahindra Bank were the most actively traded contracts.  End

 

Edited by Rajeev Pai

 

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