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Informist, Monday, Aug. 4, 2025

By Akash Mandal

MUMBAI – Options data showed the Nifty 50 is unlikely to cross 25000 points despite the index recovering from the last week's fall partially on Monday. Analysts said Monday's gains were due to a technical bounce-back and short covering by traders, but the sentiment remains bleak.

Traders bought in-the-money and at-the-money call options and covered their short positions amid gains in the cash market. However, they added short positions at out-of-the-money call options above the 25000 strike price, implying the Nifty 50 faces a tough battle to reclaim the 25000-point mark in the coming sessions. The maximum open interest on the call side was at 24800-25000, which suggests the Nifty 50 is likely to face strong resistance at these levels.

On Monday, the Nifty 50 ended the session 157 points higher at 24722.75 points, snapping a two-session losing run. The index had fallen over 1% over the past two sessions. "Put writing along with short covering on the call side provided the needed support to the bulls....so far, this seems to be bounce only and overall options data is negative," Vipin Kumar, assistant vice-president and senior derivatives analyst at Globe Capital Market, said.

On the puts side, traders sold options across the board, implying that they do not expect any sharp downside from current levels. The highest open interest addition was at the 24600-24700 strike prices, which are likely to act as support for the index. Traders also covered short positions at in-the-money contracts between 24900 and 25650. 

There was some caution among analysts due to stretched valuations, geopolitical headwinds, and slowing earnings growth. However, some analysts said the earnings slowdown was largely done, and expect growth to improve in the second half of this financial year.

"We remain confident and ahead of consensus...the soft earnings growth patch that started with 2QFY2025 seems to be ending but the market is probably not yet convinced," Morgan Stanley said in its strategy report Monday. A final trade deal with the US, more announcements on capital expenditure, pick-up in loan growth, uniform improvement in high-frequency data, and improving trade with China could act as catalysts for the Indian market, said the brokerage.

"While FPI portfolio positioning is at its weakest since the data started in 2000, our view remains that India's low beta implies outperformance in a global bear market but underperformance in a bull market," the brokerage said. However, it also pointed to factors such as slowing global growth and worsening geopolitical conditions as downside risks for the market.

--Nifty 50 Aug closed at 24803.00, up 175.80 points; 80.25-point premium to the spot index

--Nifty 50 Sep closed at 24938.90, up 164.30 points; 216.15-point premium to the spot index

--Nifty 50 Oct closed at 25041.40, up 149.00 points; 318.65-point premium to the spot index

ABB India, HDFC Bank, UPL, Hero MotoCorp, Infosys, Aditya Birla Capital, Reliance Industries, Multi Commodity Exchange, Tata Consultancy Services, Federal Bank, ICICI Bank, State Bank of India, Delhivery, TVS Motor Co., and Tata Power were the most active underlying stocks Monday.  End

Edited by Avishek Dutta

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