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Informist, Thursday, Jan. 2, 2025

By Anshul Choudhary

MUMBAI – Traders covered short positions in options as the Nifty 50 crossed its resistance of 24000 points after two weeks. Further short-covering is expected if the Nifty 50 moves above 24200 points. However, analysts said traders have not added any significant long positions yet due to concerns over slowdown in the economy, which will likely limit the rise of the benchmark index.

"Short-covering was seen after the Nifty 50 crossed 24000 points and that is when we saw sharp gains," Mehul Kothari, assistant vice-president of technical research at Anand Rathi Share and Stock Brokers, said. The Nifty 50 closed nearly 2% higher at 24188.65 points.

Considering the high number of short positions of foreign investors, Kothari said they have likely covered their bets Thursday. Before the market opened, Nuvama Wealth Management had said foreign institutional investors were net short on index futures by $1.8 billion.

"The FIIs long-short ratio has dropped to 13% which is at its lower band," Chandan Taparia, head of equity derivatives and technicals at Motilal Oswal Financial Services, said in a note. "Option data suggests a broader trading range in between 23500 to 24500 zones (for Nifty 50) while an immediate range between 23900 to 24300 levels."

In the case of call options expiring next week, traders covered their short in-the-money positions, and some long positions were also added at strike prices below 25000. Data showed there is some optimism that the market trend may turn positive with the highest open interest addition seen at 26500 calls, followed by 25000 calls. Taparia said call writing was seen at 24200 and 24800 strike prices.

Traders continued to sell put options across the board on hopes of further gains after Thursday's short covering. The highest open interest addition was seen at 21850 puts, followed by 23000-24000 puts. These levels are seen as immediate support levels for the Nifty 50.

The January futures contract of the Nifty 50 closed at a premium of 81.45 points to the spot index. Open interest in the contract fell 4.7% to 12.65 million, according to provisional data.

--Nifty 50 Jan closed at 24270.10, up 372.25 points

--Nifty 50 Feb closed at 24406.25, up 366.50 points; 217.60-point premium to spot index

--Nifty 50 Mar closed at 24550.00, up 354.60 points; 361.35-point premium to spot index

Bajaj Finance, Reliance Industries, HDFC Bank, Maruti Suzuki India, Infosys, Eicher Motors, Bajaj Finserv, ICICI Bank, Tata Motors, State Bank of India, Kotak Mahindra Bank, Mahindra & Mahindra, ITC, Petronet LNG, Axis Bank, and Bajaj Auto were the most actively traded contracts.  End

Edited by Ashish Shirke

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