Informist, Monday, Sep 11, 2023

By Ananya Grover

MUMBAI – Traders bought call option contracts of 20000 and 20100 strike prices of the Nifty 50 today as the benchmark index crossed its psychological resistance of 20000 points in the spot market.

The Nifty 50 ended 0.9% higher at 19996.35 points, its highest closing level. "The optimism surrounding the Indian economy, especially after a strong show at the G20 summit, is fuelling the current rally in markets," Manish Chowdhury, head of research of trading platform StoxBox, said in a note.

Traders who had taken bearish positions at call option of 20000 strike price unwound them, which led the premium to jump up by 56.90 rupees. On the other hand, put writers became active at 19900 strike price, which saw the premium fall by 87.10 rupees.

"We may see some consolidation around the current levels after reclaiming the record high, but the tone is likely to remain positive," Ajit Mishra, senior vice president of technical research at Religare Broking, said in a note.

Kotak Securities Head of Research Shrikant Chouhan also said in note to investors that though the undertone appears bullish, the market seems to be in an overbought position and hence caution may prevail going ahead.

A jump of 6% in the volatility index India VIX to 11.35 also suggests caution in the market. "Some traders are cautious and have deployed hedges," said Viraj Vyas, technical and derivatives analyst at Ashika Stock Broking. Vyas expects the Nifty 50 to rise to 20100–20150 points and then consolidate.

While call strikes at 20000 and 20100 levels saw maximum open interest addition, open interest at strikes of 20200, 20300, and 20500 points also rose by more than 1 mln. On the put side, writers became active at 19900 and 20000 points.

In the option contracts of the Nifty Bank index, which rose 0.9% to end at 45570.70 points, maximum open interest was added at 45500 put strike, with premium falling by 320 rupees. The open interest in 45400 put strike saw the second-highest addition, with premium falling by 278.05 rupees.

Vyas said there are more chances of the index hitting 46000 points if it stays above 45500 points. On the call side, maximum open interest was added at 45600–45800 strikes.

The September futures contract of the Nifty 50 closed at a premium of 49.65 points to the spot index. Open interest in the contract was up 2.2% at 10.26 mln, according to provisional data.

--Nifty 50 Sep closed at 20046, up 173.55 points; 49.65-point premium to spot index

--Nifty 50 Oct closed at 20148, up 173.15 points; 151.65-point premium to spot index

--Nifty 50 Nov closed at 20256, up 171.05 points; 259.65-point premium to spot index

Adani Ports and Special Economic Zone, REC, HDFC Bank, Reliance Industries, and Canara Bank were among the most actively traded underlying stocks.  End

Edited by Ashish Shirke

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