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Informist, Wednesday, Jan. 8, 2025

By Alina Geogy

MUMBAI – Traders covered short positions in options contracts of the Nifty 50 after the benchmark index bounced back sharply from its support level of 23500 points on Wednesday, analysts said. The Nifty 50 is now expected to rise over the next two days and test the 23800-23850 levels on Thursday, provided it recovers from any initial losses, they said.

The Nifty 50 fell as much as 0.9% to an intraday low of 23496.15 points during the session Wednesday. However, the index fell below its support level of 23500 points for hardly a minute and bounced back sharply from that level. It rose nearly 230 points from its intraday low and even attempted a brief recovery. It then closed just around 19 points or 0.1% lower at 23688.95 points.

There was call-writing seen initially during the session Wednesday, but there was aggressive put-writing after the Nifty 50 index reversed its fall and nearly recovered, Anshul Jain, head of research at Lakshmishree Investment and Securities, said. There has been a nearly equal amount of call and put writing, he said. Though there is a slight skew towards call writing, the put-call ratio is nearly zero, he said.

In comparison with the Nifty 50 contracts, call writing in the Nifty Bank contract was slightly higher, especially as the intraday bounce-back in the banking index was also lower, Jain said. This index could also have an upmove after settling for the next two days, he said.

There was short-covering in the Nifty 50 derivatives, especially after gains in some index heavyweight stocks Wednesday, Jain said. The 50-stock index could now rally till 23800-23850 points, while the Nifty Bank could rise to 50400 points, he said. The Nifty Bank index closed at 49835.05 points, down 0.7% Wednesday.

There is some cautiousness in the market ahead of the December quarter earnings, which will be kicked off by Tata Consultancy Services on Thursday, likely after the session ends. Investors are also watchful of outflows by foreign institutional investors, which has dented market sentiment to some extent over the past few weeks. On Wednesday, FIIs net sold shares worth nearly INR 34 billion, over two times the net sales of INR 15 billion on Tuesday.

The weekly options contracts of the Nifty 50 will expire Thursday. For the Nifty 50 options expiring Thursday, the maximum change in open interest was at the 23700-strike price on the call side and at the 23400-strike price on the put side. The maximum open interest on the call side for these weekly contracts was at the 24000-strike price, and at 23000 points on the put side.

The January futures contract of the Nifty 50 closed 0.1% lower at 23776.35 points, which is at a premium of 87.40 points to the spot index. Open interest in the contract rose 3.5% to 13.09 million, according to provisional data.

--Nifty 50 Jan closed at 23776.35, down 18.70 points

--Nifty 50 Feb closed at 23915.00, down 19.40 points; 226.05-point premium to spot index

--Nifty 50 Mar closed at 24070.95, down 18.45 points; 382.00-point premium to spot index

The most actively traded underlying Wednesday were Reliance Industries, Dixon Technologies India, HDFC Bank, Infosys, Tata Consultancy Services, ICICI Bank, State Bank of India, Axis Bank, Tata Motors, and Oil and Natural Gas Corp. of India.  End

Edited by Saji George Titus

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