Informist, Friday, Nov 3, 2023

By Akshata Gorde

MUMBAI – Investors covered their short positions after the Nifty 50 index continued to gain in the spot market today. However, the option chain expiring on Thursday hints at a tight range of 19200-19300 points for the spot index as investors remain fearful of another round of correction.

Traders bought call options at 19300-19500 strike prices after unwinding bets at lower levels, with the highest open interest build up of 7.1 mln contracts for the 19300 strike, suggesting that the index may not breach these levels easily. Meanwhile, put writing at 19200-19000 strikes indicates a tight range for the Nifty 50 index as traders hope for the index to stay above these levels. 

"While the Nifty 50 index may move up to 19400–19500 points in the near-term, it will be a slow grind on the upside," Jay Vora, senior technical and derivatives analyst at Indiacharts.com said. "Further, there could be another leg of correction down to 18800 points, even up to 18500 points," he added.

The anticipation of a fall in the market has led to significant short positions in the derivatives market, but as the undertone still remains positive, short covering could lead to a rally, said analysts. "The positions are short-heavy and hence, if they start covering their short positions, then it could lead to a decent rally in the short term," said Ruchit Jain, lead technical research analyst at 5paisa. 

The Nifty closed 0.5% higher at 19230.60 points today, rising for the second consecutive session, due to positive sentiment in the global markets. Today, the Nifty 50 recovered almost 40% of the losses incurred last week.

The derivatives' data shows immediate support at 19200 points, followed by 19000 points, for the Nifty 50, and resistance at 19300-19500 points. Premium on the 19300 call strike rose by 13.6% to 63.45 rupees, with the maximum open interest addition of 3.7 mln contracts.

On the put side, premium on the 19200 strike price fell by 37% to 69.55 rupees, with the highest open interest addition of 3.7 mln contracts today, and open interest of 5.4 mln contracts.

Even the November futures contract showed significant short positions as open interest fell 2.4% to 11.42 mln contracts, according to provisional data. "FIIs (foreign institutional investors) have significant short positions outstanding with about 85% positions on the short side in the index futures segment," said Ruchit Jain. 

--Nifty 50 Nov closed at 19296, up 57.15 points; 65.4-point premium to spot index

--Nifty 50 Dec closed at 19401, up 58.80 points; 170.4-point premium to spot index

--Nifty 50 Jan closed at 19507, up 63.45 points; 276.4-point premium to spot index

Tata Motors, HDFC Bank, Bajaj Finance, State Bank of India, Titan Co, ICICI Bank, MRF, Power Finance Corp, Reliance Industries, and DLF were among the most actively traded underlying stocks.  End

Edited by Aditya Sakorkar

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2023. All rights reserved.