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Informist, Wednesday, Dec. 11, 2024

By Apoorva Choubey

MUMBAI – In an indication that market participants remain risk-averse, writers continued to be active in out-of-the-money call options of the Nifty 50 monthly series, while selling was seen in the index's put options across the board. Most global equities have been lacklustre this week, as investors are waiting for key events such as the US Federal Reserve's policy review and a slew of economic data releases across several countries. 

Traders continued to sell the 24700, 24800 and 25000 strike price call options aggressively. Writing in out-of-the-money strikes suggests that gains, if any, are seen limited this week, analysts said.

The index witnessed a subdued and choppy session for the fourth day in a row, to end at 24641.80, up 31.75 points or 0.1% from the previous close. On the put side, the 24500 and 24000 strike prices were the most actively sold. 

"Investors remained cautious ahead of key US and Indian CPI inflation data, which could shape the Federal Reserve's and RBI's monetary policy outlooks," said Vikram Kasat, head - advisory, PL Capital. As global and domestic inflation data loom large, markets remain on edge, awaiting cues for future rate trajectories, he said. 

The Nifty 50 is witnessing more writing activity over the last few weeks, according to a city-based derivatives expert at a broking house. "Writing options is by nature a defensive strategy, because you are not paying any premium at the time of entering the contract," she said. 

Apart from options writing, a marginal increase in net short bets by foreign investors also points to a bearish bias in index futures, she added. Open interest in the December futures of the Nifty 50 rose 1% to 11.3 million. 

However, the positives of sustained domestic inflows and hopes of consumer demand recovery in the ongoing wedding season are some of the reasons that are expected to keep equities afloat. "We expect markets to continue to trade in a broad range with a positive bias backed by intermittent FPI inflows and optimistic news flows around government spending," said Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services. 

The trend of the benchmark is supported by bullish hourly charts reflecting higher highs and higher lows, according to Om Mehra, a technical analyst at SAMCO Securities. The support for the Nifty 50 is seen at 24500, while resistance remains around the 24770-24820 zone, he said. 

Among stock futures, buying was seen in consumer staples and healthcare counters while the metal sector saw some covering of short bets driven by optimism surrounding potential stimulus measures from China, experts said.

--Nifty 50 Dec closed at 24738.00, up 55.40 points; 96.20-point premium to spot index

--Nifty 50 Jan closed at 24912.50, up 55.85 points; 270.70-point premium to spot index

--Nifty 50 Feb closed at 25046.05, up 40.90 points; 404.25-point premium to spot index

Bajaj Finance, Vedanta, HDFC Bank, Reliance Industries, ICICI Bank, Axis Bank, Infosys, UltraTech Cement, Trent, State Bank of India, Tata Motors, IRFC, Mahindra & Mahindra, Bharti Airtel, UPL and Zomato were the most actively traded contracts.  End

Edited by Saji George Titus

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