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Informist, Friday, Dec. 27, 2024

 

By Anshul Choudhary

 

MUMBAI – Options traders added short positions after the Nifty 50 failed to maintain the gains accumulated in the previous week. The data showed some traders expect the index to fall below 23500 points, which is currently seen as a support.

 

With the new year set to begin, analysts advise investors to moderate their expectations of returns from equity markets in 2025 amid the ongoing slowdown in earnings and outflows by foreign investors. Market participants now await the December quarter earnings, which will help them to assess if the current slowdown in earnings is temporary or could last a few more quarters. Amid these concerns, the Nifty 50 fell 0.7% Monday to 23644.90 points after gaining 1% last week.

 

For the contracts expiring this week, traders bought put options with premiums rising across the board. Traders added short positions at strike prices below 23500 points as this level, which is seen as an immediate support, is now just 0.6% away from the current level. "Today's decline signals potential for further downside, with a decisive break below 23,500 likely to confirm this trend, setting the next target at 23,250," Ajit Mishra, senior vice-president at Religare Broking, who looks at derivates for the firm, said in a note.

 

Some traders expect the index to fall more as the highest addition of open interest was seen at 23200 put options. Premiums at 23200 strike puts rose 10% to INR 11.50. Premiums at 23500 strike puts rose 60% to INR 54.00.

 

For call options, traders added short bets and premiums fell across the board. The maximum addition of open interest was at 23800-24000 call options, which remains the immediate resistance for the index. Premiums at 23600 strike calls fell 40% to INR 192.00, and those at 23800 strike calls halved to INR 87.50.

 

The January futures contract of the Nifty 50 closed at a premium of 183.10 points to the spot index. Open interest in the contract rose 6.3% to 12.43 million, according to provisional data.

 

--Nifty 50 Jan closed at 23828.00, down 164.65 points; 183.10-point premium to spot index

--Nifty 50 Feb closed at 23983.00, down 149.60 points; 338.10-point premium to spot index

--Nifty 50 Mar closed at 24126.20, down 149.25 points; 481.30-point premium to spot index

 

HDFC Bank, Adani Enterprises, ICICI Bank, State Bank of India, Zomato, Coforge, Axis Bank, The Indian Hotels, Reliance Industries, Persistent Systems, Tata Motors, and Federal Bank were the most actively traded contracts.  End

 

Edited by Rajeev Pai

 

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