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Informist, Monday, Feb. 10, 2025

By Anshul Choudhary

MUMBAI – Options data suggest the Nifty 50 may find support at current levels but any gains are expected to be limited due to disappointing earnings for the December quarter and fears of tariffs by the US. The Nifty 50 is likely to find support at 23300-23400 points, making a case for slightly positive momentum on Tuesday if global cues are favourable. However, it may face resistance at 23500 points.  

Fresh threats of more tariffs by US President Donald Trump led to a fall in domestic indices Monday, with the Nifty 50 down 0.8% at 23381.60 points. Trump said he would impose 25% tariff on all steel and aluminium imports into the US, along with some other reciprocal tariffs later this week. This led to risk-off sentiment in India as tariff on steel imports by the US would mean dumping of these products in India, further hurting the Indian metal industry.

The December quarter earnings season has been disappointing so far, with Nifty 50 constituents missing expectations at an aggregate level, an analysis by Informist showed. Analysts are worried that the earnings slowdown is likely to last a few more quarters as the income tax relief in the Budget and interest rate cuts by the Reserve Bank of India would take some time to spur growth.

Overall, traders added short positions considering the weak sentiment in global markets after Trump's comments. For call options expiring this week, traded added short positions across the board, with analysts expecting the Nifty 50 to face resistance at 23500 points. The highest open interest addition was seen at the 23400-24000 call options.

Some gains in the previous two weeks from the lows of 22800 points have led to hope of further gains in the coming session. However, the decline in the Nifty 50 for the fourth straight session hit sentiment as traders unwound long positions on the put side. Traders bought at-the-money and in-the-money put options with maximum addition of open interest at 22800-23400 put options.

The February futures contract of the Nifty 50 closed at a premium of 76.15 points to the spot index. Open interest in the contract rose 4% to 17.42 million, according to provisional data.

--Nifty 50 Feb closed at 23457.75, down 157.20 points; 76.15-point premium to spot index
--Nifty 50 Mar closed at 23608.00, down 157.70 points; 226.40-point premium to spot index
--Nifty 50 Apr closed at 23743.25, down 160.40 points; 342.00-point premium to spot index

HDFC Bank, Bajaj Finance, Mahindra & Mahindra, Trent, Reliance Industries, State Bank of India, Bharti Airtel, ICICI Bank, Tata Motors, Infosys, Tata Steel, Vedanta, and Bharat Electronics were the most actively traded underlying stocks on Monday.  End

Edited by Avishek Dutta

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