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Informist, Friday, Dec. 27, 2024

 

By Anshul Choudhary

 

MUMBAI – Traders sold out-of-the-money call options as the Nifty 50 continues to face selling pressure at higher levels. However, considering the Nifty 50 is already down over 10% from its lifetime high, analysts are not expecting any major fall from here, which likely pushed traders to buy in-the-money call options. 

 

Analysts continue to expect a range-bound movement in the Nifty 50 amid several concerns around continuous outflows by foreign investors, the possibility of an extended period of slowdown in earnings, and high stock valuations affecting returns in 2025. Amid these concerns, the Nifty 50 has failed to recover from the slump it saw in October, and is heading to a third straight month of fall, if the market doesn't bounce back in the final two sessions of this month.

 

The Nifty 50 managed to close above 23800 points after facing selling pressure above this level for the past three sessions. On Friday, it closed at 23813.40 points, up 0.3%. 

 

Looking at option contracts expiring next week, the Nifty 50 is unlikely to see sharp gains ahead. Premiums of call options above 23900 points declined, while open interest rose, indicating an addition of short positions. The highest open interest addition was at 25000 calls, followed by 24200-24100 strike prices. These levels are likely to act as immediate resistance for the index next week.

 

On the put side, traders sold options across the board as the Nifty 50 managed to rise above 23800 points despite facing selling pressure at higher levels. The highest open interest addition was at 23500 strike price, which is likely to act as immediate support if the Nifty 50 begins to fall. Premiums for at-the-money puts more than halved as the Nifty 50 posted gains.

 

The January futures contract of the Nifty 50 closed at a premium of 186.60 points to the spot index. Open interest in the contract rose 5.3% to 11.75 million, according to provisional data.

 

--Nifty 50 Jan closed at 24000.00, up 80.25 points; 186.60-point premium to spot index

--Nifty 50 Feb closed at 24146.85, up 80.20 points; 333.45-point premium to spot index

--Nifty 50 Mar closed at 24293.70, up 106.65 points; 480.30-point premium to spot index

 

End

 

Edited by Deepshikha Bhardwaj

 

 

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