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Informist, Tuesday, Feb. 25, 2025

By Alina Geogy

MUMBAI – Traders added short positions to the derivatives segment of the Nifty 50 Tuesday amid near-term bearishness. Investor sentiment took a hit after US President Donald Trump said he would press ahead with tariffs on Canada and Mexico as scheduled. The sentiment was aggravated by the recent unabated selling by foreign institutional investors and worries about recovery in corporate earnings. As the market opens Thursday following Wednesday's Mahashivratri holiday, market participants will keep an eye out for volatility due to the monthly expiry of the February derivatives series.

Tuesday, the Nifty 50 closed barely 6 points lower at 22547.55 points, clocking a decline for the sixth consecutive session. The index had risen as much as 0.3% and hit an intraday high of 22625.30 points earlier in the day, a welcome relief after Monday's sharp fall of 1.1%. However, it failed to hold on to the gains and was almost flat by the end of the session. The market's approach will continue to be "sell-on-rise" till the Nifty 50 surpasses 23000 points, a technical analyst at a Mumbai-based broking firm said.

Traders unwound long positions in most out-of-the-money calls and added short positions to in-the-money calls. The maximum addition of open interest on the call side was at the 22700-point strike price, where the premium fell over 83%. The maximum addition of open interest on the put side was at the 22600-point strike, where the premium rose 69%.

"Sentiment continues to favour the bears as the index sustained below the 21 EMA (21-day exponential moving average) on the hourly chart throughout the day, indicating selling on every rise," Rupak De, senior technical analyst at LKP Securities, said in a note. On the lower end, support is placed at 22500 points, below which sentiment may worsen. On the higher end, resistance is seen at 22650 points and 22750-22800 points. A rise towards resistance is likely to attract selling pressure."

Several key indices across the globe took a hit after Trump said "the tariffs are going forward on time, on schedule" in a press conference Monday with France's President Emmanuel Macron. Tariffs of 25% on Canada and Mexico were set to take effect early February, but were later delayed by a month.

Besides the uncertainty about tariffs, foreign institutional investors' net sales of shares worth nearly INR 63 billion on the exchanges Monday dented market sentiment. By comparison, domestic institutional investors net purchased shares worth almost INR 52 billion Monday. So far in 2025, foreign portfolio investors have sold shares amounting to INR 1.11 billion in the domestic market.

The February futures contract of the Nifty 50 closed at a premium of 18.20 points to the spot index Tuesday. Open interest in this contract fell 5.6% to over 11 million, according to provisional data.

--Nifty 50 Feb closed at 22565.75, down 46.90 points
--Nifty 50 Mar closed at 22696.00, down 48.55 points; 148.45-point premium to spot index
--Nifty 50 Apr closed at 22858.25, down 36.85 points; 310.70-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, Bajaj Finance, State Bank of India, Axis Bank, Tata Consultancy Services, Bharti Airtel, Infosys, Mahindra & Mahindra, Kotak Mahindra Bank, Tata Motors, Larsen & Toubro were the most active underlying stocks on the National Stock Exchange Tuesday.  End

Edited by Rajeev Pai

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