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Informist, Thursday, Aug. 7, 2025

 

By Akash Mandal

 

MUMBAI – Traders likely shrugged off US President Donald Trump's 25?ditional tariff on India as the market recovered after a fall early in the session, aided by traders covering some short positions ahead of the weekly expiry. Analysts said the recovery during the session was an example of "TACO trade", an abbreviation for "Trump always chickens out", referring to the tendency of markets to fall immediately after any announcement by the President, only to recover shortly.

 

Traders had sold call options all across the board earlier in the session, long unwinding at out-of-the-money options between 24700-25450. However, the Nifty 50's recovery was led by short covering seen at in-the-money call and put options ahead of the weekly expiry. Among call contracts expiring next week, the highest open interest was added at the 25000 contract. The contract also held the maximum open interest, followed by the 25200 and 25500 strike prices. This implies that the market expects the Nifty 50 to test the 25000 levels next week.

 

Most analysts believe the market has bottomed out with the Nifty 50 already down nearly 4% from its one-month high of 25548.70. Analysts said foreign investors have built up huge short positions amid persistent selling, and any further dips would lead to short covering. "FIIs are at a short position and extreme short position... they have gone as short as they could, so they don't have space to short more. So, there will be short covering from here," Anshul Jain, head of research at Lakshmishree Investments, said. FIIs have dumped INR 361 billion of shares over the last 12 sessions, and have net sold equities worth INR 421 billion in July.

 

While Jain said the market is likely to rise going forward, some analysts said 24200 points is the lowest that the 50-stock index could fall to. On Thursday, the Nifty 50 ended 22 points higher at 24596.15 points, having fallen as much as 230 points at its intraday low.

Among put contracts expiring next week, the highest open interest was added at the 24500 strike price, with traders adding bullish bets at that level. This implied that the market does not see a significant downside from current levels under the present circumstances. There was also buying in call contracts at the 24400 and 24200 strike prices. However, the 24000 put contract also held significant open interest, indicating that the Nifty 50 might see a sharp fall if it falls below the 24400-24500 levels. 

 

--Nifty 50 Aug closed at 24715.00, up 80.10 points; 118.85-point premium to the spot index

--Nifty 50 Sept closed at 24842.00, up 72.20 points; 245.85-point premium to the spot index

--Nifty 50 Oct closed at 24953.20, up 64.10 points; 357.05-point premium to the spot index

 

Eternal, Reliance Industries, HDFC Bank, Infosys, ICICI Bank, Hero MotoCorp, State Bank of India, Trent, BSE, Kotak Mahindra Bank, Lupin, Tata Motors, Bharat Heavy Electricals, Adani Enterprises, and Bajaj Auto were the most active underlying stocks Thursday.  End

 

Edited by Saji George Titus

 

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