Informist, Monday, Dec 11, 2023

By Padmini Dhruvaraj

MUMBAI – Investors sold both call and put options across strike prices of the Nifty 50's derivatives expiring Thursday after the spot index turned choppy today, post recording a fresh lifetime high. However, the underlying sentiment in the market is still positive, analysts said.

The Nifty 50 index opened higher today, led by gains in shares of banks and energy companies, and recorded an all-time high of 21026.10 points. Eventually, the 50-stock index ended 0.1% higher at 20997.10 points. "The momentum at new highs indicates a strong uptrend in the markets and although the RSI (relative strength index) readings are overbought, there are no signs of reversal as of now," Ruchit Jain, lead research, 5paisa.com said in a note.

However, premiums across call options declined today, indicating bearish sentiment in the market. The 21000 strike price of the call options had the highest open interest additions today, with 2.41 mln new open contracts, while the premiums fell 14% to 94.90 rupees. Additionally, some aggressive call selling was seen at 21500 and 21650 strike prices.

On the put side, the 20900 strike price had the highest net change in open interest, with 2.16 mln new positions, while the premium on the contract fell 21.33% to 45 rupees. Additionally, some aggressive put selling was seen at 18900 and 18800 strike prices.

"Despite the index showing signs of sluggishness, bears have been unable to dismantle the optimistic bias," said Avdhut Bagkar, technical and derivatives analyst at StoxBox, in a note. "While the derivative data reveals writing in the 21000 CE (call), the 20900 PE (put) is representing as a support and has witnessed convincing write-off. The broader outlook portrays a rising trend, which shall stay in line until definitive sell-off structures appear," he added.

Meanwhile, the December futures contract of the Nifty 50 closed at a premium of 82.40 points to the spot index today. Open interest in the contract rose 2.67% to 11.96 mln, according to provisional data.

"FIIs (foreign institutional investors) have formed long positions in the index futures segment where they started the December series with 36% long positions, but now have around 57% positions on the long side," said Jain. "They have been net buyers in the cash segment too which is a positive sign." 

Going forward, analysts expect the Nifty 50 index to find immediate support at 20900 points and then at 20800, while resistance is seen around 21080 points.

--Nifty 50 Dec closed at 21079.50, up 4.50 points; 82.40-point premium to spot index

--Nifty 50 Jan closed at 21197.05, down 0.90 points; 199.95-point premium to spot index

--Nifty 50 Feb closed at 21309.70, up 9.75 points; 312.60-point premium to spot index

Dixon Technologies, State Bank of India, Reliance Industries, ICICI Bank, Hindustan Aeronautics, Tata Power, Adani Enterprises, UPL, GMR Airports Infrastructure, Jindal Steel, HDFC Bank, and DLF were among the more actively traded underlying stocks.  End

Edited by Manisha Baxla

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