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Informist, Friday, Jan. 17, 2025

By Anshul Choudhary

MUMBAI – Shares of banks are likely to face selling pressure at higher levels amid concerns about slower credit growth and rising costs, options data for the Nifty Bank index showed. However, comfortable valuations of private banks would likely mean these stocks may find buyers at any fall.

Concerns around credit growth, especially for private banks, came to the forefront after quarterly updates by several banks showed lower-than-anticipated growth in credit. The concerns were exacerbated after Axis Bank Thursday reported weak earnings for the December quarter.

Axis Bank's credit growth slowed during the quarter, margins witnessed a contraction, and retail slippages rose. Shares of the bank closed 4.5% lower at INR 991.05. Owing to this, the Nifty Bank closed 1.5% lower at 48540.60. The sectoral index has lost over 8% in one month.

Traders sold Bank Nifty call options across the board, indicating expectations of a fall in the near term. The highest open interest was added at 50000 calls, followed by 49000 calls. These levels are likely to act as resistance, indicating a rise of 1-3% before the index faces selling pressure.

At the same time, traders bought put options across the board. The highest open interest was at 45000 strike prices, followed by 48000 strike prices, which is likely to act as support in the near term, indicating a fall of over 1%.

For the Nifty 50, traders sold call options and bought put options as the Nifty 50 fell Friday after rising for three straight sessions. The Nifty 50 closed at 23203.20 points, down 0.5%. Looking at option contracts expiring next week, the Nifty 50 is expected to move in a broad range of 22700-24000 points as there is still uncertainty over the market's direction.  

The January futures contract of the Nifty 50 closed at a premium of 58.55 points to the spot index. Open interest in the contract rose 5.8% to 14.3 million, according to provisional data.

--Nifty 50 Jan closed at 23261.75, down 115.80 points

--Nifty 50 Feb closed at 23397.20, down 111.45 points; 194.00-point premium to spot index

--Nifty 50 Mar closed at 23550.00, down 103.50 points; 346.80-point premium to spot index

Reliance Industries, Infosys, Axis Bank, HDFC Bank, ICICI Bank, Havells India, Hindustan Aeronautics, Tech Mahindra, Kotak Mahindra Bank, Dixon Technolgies, LTIMindtree, SBI Life Insurance, Zomato, Trent, Tata Motors, and Tata Consultancy Services were the most actively traded underlying stocks Friday.  End

Edited by Saji George Titus

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