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Informist, Tuesday, Oct. 14, 2025

 

By Anjana Therese Antony

 

MUMBAI – Traders aggressively wrote out-of-the-money call options of the Nifty 50 on expectations that the index will fall more in the near term. The weakness in market is anticipated due to likely losses in heavyweight banking stocks from weak earnings growth for the September quarter, particularly due to pressure on net interest margins, increasing gap in credits and deposits, and the deterioration in asset quality, research analysts said. 

 

The September quarter earnings season, which kickstarted last week, is unlikely to show better financial growth across sectors due to no major change in the macroeconomic environment, analysts said. They also believe it will take some more time for the benefits of the government's goods and services tax cuts to get reflected in consumption trends. 

 

"I think the market should fall some 5% at least from the current level so that it gives a better entry point," an equity strategist at a domestic broking firm said. Valuations are remaining above their 10-year historical average and there is no room for anyone in the market to make better returns at this point, the strategist said. 

 

The Nifty 50 is currently trading almost 23 times the price-to-earnings ratio, higher than its long-period average of 20-21 times the P-E ratio. On Tuesday, the 50-stock index closed 0.3% lower at 25145.50 points, extending its fall for the second consecutive session. The fall was broad-based, primarily led by losses in banks and financial services stocks, which together contributed to a 0.1?cline in the 50-stock index.  

 

The immediate support for the index is pegged at the psychologically important 25000 level, a fall below which it may test the next key level of 24800 points, a technical and derivatives analyst at a domestic broking firm said. The resistance is seen at 25300-25350 points, the analyst said. However, the index is unlikely to reach its record high of 26277.35 points hit in September last year, which is still 4% higher than the spot level. 

 

Open interest addition in call contracts of 25200-26500 strike prices expiring Monday were the highest, up over 4 million each. Premiums on 25200-26500 strike call contracts declined 26-34%. Next week, Nifty 50 options contracts will expire on Monday as the equity market will be shut Tuesday on account of Diwali Laxmi Pujan. 

 

On the puts side, premiums on some contracts lower than the spot level rose, indicating the possibility of a near-term fall in the index. Premiums on 25100-24700 put strikes expiring next week increased 30-59%. The maximum addition of open interest was at 25100 put option and the highest concentration was at the 24000 contract. 

 

--Nifty 50 October closed at 25185.50, down 123.80 points; 40.00-point premium to the spot index

--Nifty 50 November closed at 25314.20, down 131.80 points; 168.70-point premium to the spot index

--Nifty 50 December closed at 25485.00, down 122.30 points; 339.50-point premium to the spot index

 

Multi Commodity Exchange of India, BSE, Infosys, Tata Motors, HDFC Bank, Reliance Industries, HCL Technologies, Tata Consultancy Services, Axis Bank, ICICI Bank, Dixon Technologies (India), Angel One, Hindustan Zinc, State Bank of India, Bajaj Finance, and Bharat Electronics were the most active underlying stocks Tuesday.  End

 

Edited by Tanima Banerjee

 

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