Informist, Monday, Jul 25, 2022

By Ankika Biswas

MUMBAI – The weak technical and derivative indicators have prompted analysts to believe that shares of index-heavyweight Reliance Industries, the country's most valuable company, may remain under pressure going ahead.

In case of continued selling, the stock may edge further down towards 2,350-2,360 rupees, analysts said, pointing at the maximum open interest addition at the 2,360-rupee strike price put option.

Further, the over 8% rise in open interest of the July futures contract also hinted at a strong formation of short positions.

Sharp selling trickled into the stock today, as the conglomerate's bottomline for Apr-Jun missed the Street's estimate and amid weak earnings prospects following sharp fall in Asian gross refining margins.

Foreseeing further downside in the stock, analysts advised market participants to avoid bottom fishing at current levels. Today, it closed over 3% lower at 2,420.40 rupees.

Other Nifty 50 stocks with strong derivative action included Kotak Mahindra Bank that saw a build-up of short positions, Mahindra & Mahindra that underwent strong unwinding of long positions and Tata Steel that witnessed addition of long positions. 

Among other notable movers were Navin Fluorine International that zoomed 11%, following a better-than-expected net profit for Apr-Jun, spurring strong bullish bets in the derivative segment. Open interest of the July futures contract jumped over 33%.

With profit booking weighing on the Nifty 50, analysts have largely ruled today's weakness as a minor correction as the trend remains positive. The headline indices snapped a six-day winning streak today, amid steep losses in RIL and other heavy-weights.

Analysts held a positive view for Nifty 50 as long as it remains above the 16500-point support, going by the strong open interest concentration at that strike price put option.

Today, it closed 0.5% lower at 16631 points, while open interest in the July futures contract was down over 5%, suggesting unwinding of long positions.

--Nifty 50 Jul closed at 16620.00, down 102.60 points; 11-point discount to spot index

--Nifty 50 Aug closed at 16634.85, down 98.45 points; 3.85-point premium to spot index

--Nifty 50 Sep closed at 16672.00, down 98.55 points; 41-point premium to spot index

The total turnover in the futures and options segment of the National Stock Exchange was about 82.57 trln rupees, higher than the 64.84 trln rupees on Friday.

The turnover in index options was 77.23 trln rupees, as against 60.27 trln rupees on Friday. The total premium turnover of index and stock options was at 379.04 bln rupees compared with 356.84 bln rupees on Friday.  

Reliance Industries, ICICI Bank, HDFC Bank, Infosys, Adani Enterprises, Maruti Suzuki India, Axis Bank, JSW Steel, Tata Steel, Kotak Mahindra Bank, Tata Steel were the most actively traded underlying stocks.  End

Edited by Arshad Hussain

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