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Informist, Friday, Jan. 3, 2025

By Anshul Choudhary

MUMBAI – Options data shows traders are still unsure if the market has come out of the current slump. Analysts do not see any significant long buildup in derivatives even as the Nifty 50 managed to hold on to its support level of 24000 points.

Foreign investors covered their short positions on Thursday, which led to benchmark indices rising nearly 2%. However, they still held short positions of $1.65 billion in index futures as of Thursday, data from Nuvama Institutional Equities showed. The fall in benchmark indices on Friday added to the caution and traders sold call options as the Nifty 50 lost nearly half of the gains it made on Thursday. The index closed at 24004.75 points, down 0.8%.

As the Nifty 50 managed to stay above its immediate support levels, analysts said markets are likely to move higher next week. "We may see some more short covering once Nifty 50 crosses 24200 points," Kapil Shah, technical analyst at Emkay Global Financial Services. He sees immediate resistance for the Nifty 50 at 24200 points, followed by 24500 points.

Gains are likely to be limited ahead of the December quarter earnings, which are set to begin with the results of Tata Consultancy Services on Thursday. Analysts are divided on whether the current slowdown is temporary or it may last for a few more quarters. The market is likely to consolidate until they get clarity on the earnings trajectory, analysts said.

Looking at Friday's fall, traders sold call options expiring next week. The highest open interest addition was seen at 26500 strike prices, followed by 24500. Premium on 24000 calls fell 30% to INR 321, on 24200 calls fell 60% to INR 71.60, and that on 24500 declined 70% to INR 117.

On the put side, traders bought at-the-money options, but sold options below 23600 points. The highest open interest addition was seen at 23700 strike price. Traders also added open interest at 24000 strike price. These levels are likely to act as support for the Nifty 50 next week.

The January futures contract of the Nifty 50 closed at a premium of 70.05 points to the spot index. Open interest in the contract rose 3.1% to 12.82 million, according to provisional data.

--Nifty 50 Jan closed at 24074.80, down 207.85 points

--Nifty 50 Feb closed at 24216.05, down 194.80 points; 211.30-point premium to spot index

--Nifty 50 Mar closed at 24370.00, down 184.30 points; 365.25-point premium to spot index

HDFC Bank, Tata Motors, Reliance Industries, Avenue Supermarts, ICICI Bank, ITC, State Bank of India, Infosys, Oil and Natural Gas, Bajaj Finance, REC, Maruti Suzuki India, Kotak Mahindra Bank, IndusInd Bank, and Trent were the most actively traded contracts.  End

Edited by Saji George Titus

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