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Informist, Thursday, Mar. 20, 2025

 

By Alina Geogy

 

MUMBAI – Traders added bullish positions to the derivatives chain of the Nifty 50 after the benchmark index clocked yet another sharp rise and closed at a one-month high on Thursday. The 50-stock index is coming out of its oversold zone, and there has been a major reversing of the recent bearish trend as the Nifty 50 has risen by over 800-900 points in the past three days, said Jay Vora, senior technical and derivatives analyst at Indiacharts.

 

For weekly options contracts of the Nifty 50 expiring Mar. 27, the highest buildup in open interest was at the 24000-call strike with nearly 11 million contracts, indicating a strong resistance in the near term at this level. Both the highest open interest and the maximum change in open interest among weekly call options was at this strike. Premiums on this contract rose 44%. For put options expiring next week, the highest open interest was at the 22000-strike and the maximum change in open interest was at the 23000-strike. Premiums on these put contracts fell around 65%.

 

The Nifty 50 extended its opening gains gradually and rose as much as 1.4% to an intraday high of 23216.70 points, thereby surpassing the psychologically important 23200-point mark for the first time since Feb. 13. However, it closed marginally off the high at a one-month high of 23190.65 points, up 1.2%. The domestic indices mirrored rise in the headline indices of the US which closed around 1% higher each on Wednesday after US Federal Reserve officials reiterated plans to cut interest rates this year, as they did in December.

 

While the US Federal Reserve on Wednesday concluded its two-day meeting with the target range for the federal-funds rate kept unchanged at 4.25% to 4.5%, it penciled in cuts amounting to 50 basis points this year. This reduction is likely to come in two phases, with many expecting the first at the Fed's meeting in June. Expectations for rates to be kept steady in June fell to 26% from 34?ay earlier, while they rose slightly for a rate cut of at least 25 bps, as per the CME FedWatch tool.

 

The March futures contract of the Nifty 50 closed at 23191 points, a premium of 0.35 points to the spot index. Open interest in this contract fell 2% to over 16 million, as per provisional data. The derivatives landscape continues to echo a firm bullish stance, with put writers holding an upper hand over call writers, signifying growing optimism among market participants, Dhupesh Dhameja, derivatives analyst at SAMCO Securities, said in a note.

 

There has been a prolonged correction in the Nifty 50, and many indicators, such as FII positioning in index futures and market breadth, had hit extremes recently, Vora of Indiacharts said. The 50-stock index has possibly made a major bottom, and is not likely to revisit these levels any time soon, he said. Traders may end up covering their short positions if the Nifty 50 sustains these gains. The Nifty 50 may head towards 24000 points, after some pull-back and consolidation, he said. The 23000-point level will act as a strong base for the Nifty 50 if any dip occurs.

 

--Nifty 50 Mar closed at 23191.00, up 218.05 points

--Nifty 50 Apr closed at 23333.50, up 210.05 points; 142.85-point premium to spot index

--Nifty 50 May closed at 23455.00, up 219.60 points; 264.35-point premium to spot index

 

Reliance Industries, Polycab India, HDFC Bank, ICICI Bank, Infosys, Manappuram Finance, Bharti Airtel, BSE, Bajaj Finance, Vedanta, Interglobe Aviation, KEI Industries, Tata Consultancy Services, Hindustan Aeronautics, State Bank of India, Bharat Electronics, Adani Enterprises, Bank of Baroda, Kotak Mahindra Bank, Tata Motors, Larsen & Toubro, ITC, One 97 Communications, and Bharat Forge were the most actively traded underlying stocks on the National Stock Exchange.  End

 

Edited by Ashish Shirke

 

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