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Informist, Wednesday, May 21, 2025

By Anjana Therese Antony

MUMBAI - The options chain of the Nifty 50 hints the index is likely to rise around 50 points and is not expected to top 24900 points on the day of weekly expiry of options contracts Thursday. The absence of major cues for investors is likely to keep the domestic market in a tight range in the near term, derivatives analysts said. Premiums on out-of-the-money options contracts, except 24800-24850 points fell, indicating that the index is unlikely to see sharp movements ahead of the weekly expiry. Though the index rose more than 1% Wednesday, it came off highs and closed 0.5% higher at 24813.45 points. 

Premiums on 24800-24850 call strikes expiring Thursday rose 13-15%, while those on all other out-of-the-money calls at least halved. Premiums on 24800-23900 put options fell 22-75%. The highest addition of open interest of 1.46 million was at 25300 call and that of 4.05 million was at 24800 put contracts. Traders also exited some long positions from the May futures contract of the Nifty 50 and open interest fell over 2% to 10.94 million. 

Foreign investors reducing their bearish positions in index futures is a near-term positive for the equity market. On Tuesday, their long positions in index futures increased to 37% from about 20% in February. The aggressive selling pressure from foreign investors has also eased sharply compared to October. In October, FPIs had net sold equities worth almost $11 billion, the highest-ever outflows from these investors the country has seen in a month. So far in May, they net bought $3 billion worth of shares after buying $1 billion of equities in April. 

Experts echoed optimism about the long-term growth prospects of India and that the recent correction in the market has opened more room for upside. They also said earnings growth is likely to see some improvement from the second half of the current financial year. Morgan Stanley expects earnings to grow in mid- to high single teens annually in India over three-five years. It is also optimistic about the fall in India's primary deficit, low inflation volatility, dovish approach of the Reserve Bank of India, and steady crude oil prices. 

--Nifty 50 May closed at 24817.30, up 42.70 points; 3.85-point premium to the spot index

--Nifty 50 Jun closed at 24920.00, up 46.90 points; 106.55-point premium to the spot index

--Nifty 50 Jul closed at 25058.00, up 35.10 points; 244.55-point premium to the spot index

Bharat Electronics, Dixon Technologies India, Hindustan Aeronautics, HDFC Bank, Bharti Airtel, Power Finance Corp., ICICI Bank, Reliance Industries, Bajaj Finance, BSE, DLF, IndusInd Bank, Solar Industries, Hindalco Industries, State Bank of India, and Kotak Mahindra Bank were the most active underlying stocks Wednesday.  End

US$1 = INR 85.63

Edited by Vandana Hingorani

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