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Informist, Tuesday, Jan. 28, 2025

By Anjana Therese Antony

MUMBAI – Though the Indian equity market managed to take a breather from the two-day losing run, traders in the derivatives chain of the Nifty 50 do not expect sharp gains in the coming sessions, not at least till the Union Budget for 2025-26 (Apr-Mar). Technical and derivatives analysts said foreign investors are retaining their short positions and are not making any aggressive bets ahead of the Budget as well as the US Federal Reserve's monetary policy decision this week. 

"We are yet to get a strong push (cue) as earnings are disappointing and there are uncertainties around US policies," a research analyst at a domestic broking firm said, adding that "not to mention the selling pressure from FIIs (foreign institutional investors)." 

Premiums on out-of-the-money put contracts expiring Thursday as well as next week declined, while those on call options rose, hinting that the market may gain in the near term. However, those on deep out-of-the-money call strikes fell, hinting that sharp gains are unlikely. Premiums on 22950-23050 call options rose over 45%, while those on contracts above this level almost halved. Traders also added long positions in the January and February futures series of the Nifty 50. Open interest in the January contract rose 3.9% to 12.26 million. 

The Nifty 50 came off highs and closed 0.6% higher at 22957.25 points after rising about 1.3% during the day. The near-term support for the index is seen at 22900-22800 points and resistance at 23050-23100 points, a senior derivatives analyst at a domestic broking firm said. The slight recovery in the market came after the Reserve Bank of India infused INR 1.5 trillion into the banking system, boosting market sentiment. 

The analyst also said FIIs have been keeping their 80% short positions in index futures in the last couple of sessions, a similar level seen during the General Elections last year. The Indian equity market has seen major corrections since October, particularly due to the slowdown in corporate earnings growth, depreciation of the rupee, FII outflows to the US in anticipation of a major boost to the economy and to China because of its stimulus measures, anticipation of slower interest rate cuts by the US Fed, and on expensive valuations of domestic equities. 

--Nifty 50 Jan closed at 22990.00, up 143.55 points; 32.75-point premium to spot index

--Nifty 50 Feb closed at 23105.00, up 136.60 points; 147.75-point premium to spot index

--Nifty 50 Mar closed at 23260.00, up 139.50 points; 302.75-point premium to spot index

HDFC Bank, Reliance Industries, Axis Bank, ICICI Bank, Bajaj Finance, State Bank of India, Infosys, Tata Motors, Dixon Technologies India, Kotak Mahindra Bank, Tata Consultancy Services, Bharti Airtel, IndusInd Bank, Mahindra & Mahindra, NTPC, and Maruti Suzuki India were the most actively traded underlying contracts. End

Edited by Akul Nishant Akhoury

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