Informist, Wednesday, Mar 2, 2022

By Joe Milton

MUMBAI – Despite a volatile session, the Nifty 50 index managed to bounce back in the last hour of trading from around 16500 points, prompting traders to bet on this level as a near-term support. 

The headline index witnessed a gap-down opening and further dropped 1.9% to touch an intraday low of 16478.65 points. This prompted traders to buy Nifty 50 put options expiring on Thursday at 16500 strike price, pushing premiums up by over 30%. 

However, the index hovered around 16500 points before witnessing a pullback in the last hour of trading that made Nifty 50 put options sellers more active at this strike price. Thus, the premium of 16500 put option strike price expiring on Thursday dropped.  

In the put options segment of Nifty 50 expiring on Thursday, the highest open interest was at 16000, followed by 16500 strike price. 

"We continue to have a bearish view but 16400-16500 points seem to be a good support zone as the index bounced from lower levels on Monday as well," said Rajesh Bhosale, technical and derivative analyst at Angel One. 

If Nifty 50 drops below 16500 points, further selling pressure may pull the index towards 16200 points, say analysts. 

Open interest in the March futures of Nifty 50 surged 17.2% to 13.1 mln as traders continued to add short positions on every rise for the overall sentiment remains weak. 

Today, the 50-stock index closed 1.1% lower at 16605.95 points. The last hour gains in the Nifty 50 index led to a fall in the fear gauge--India VIX--index, but it continues to stay elevated near 30 points. 

Today, the volatility index surged 8% to touch an intraday high of 30.84 points, but cooled off later to close 2.3% higher at 29.23 points. 

While volatility is expected to remain higher ahead of the outcome of the US Federal Reserve meeting and results of state assembly elections, India VIX may subside in the second half of March, said ICICI Securities in its report. 

If India VIX falls below 21 points, it may provide fresh upside bias for equities, the brokerage firm added. 

On the sectoral front, the brightening earnings prospect of metal companies amid fear of global supply disruptions led to addition of long positions. 

Open interest in Hindalco Industries, NMDC Ltd, Tata Steel, and JSW Steel rose 3-11%, while the stocks gained 2-6% in the cash market, which suggests initiation of long positions. 

On the other hand, short positions were added in the automobile companies due to subdued February sales numbers.

Shares of Bajaj Auto, Hero MotoCorp, Maruti Suzuki India, and Eicher Motors fell 3-6%, and open interest in March futures of these stocks rose 6-18%, indicating short position formation. 

Traders also aggressively added short positions in the March futures of Nifty Bank as the open interest in the contract jumped 35% to 2.4 mln. In the spot market, the index closed 2.3% lower at 35372.80 points. 

--Nifty 50 Mar ended at 16644.85, down 149.40 points; 38.90-point premium to spot index

--Nifty 50 Apr ended at 16687.70, down 160.60 points; 81.75-point premium to spot index

--Nifty 50 May ended at 16730.60, down 170.55 points; 124.65-point premium to spot index

The total turnover in the futures and options segment of the National Stock Exchange was 85.1 trln rupees, compared with 62.8 trln rupees on Monday.

Markets were shut on Tuesday on account of Mahashivratri.
 
The turnover in index options was 82.1 trln rupees against 60.2 trln rupees in the previous session. The total premium turnover of the index and stock options was 512.4 bln rupees, compared with 501.9 bln rupees on Monday.
 
The most actively traded underlying stocks were Tata Steel, ICICI Bank, HDFC Bank, Hindalco Industries, Reliance Industries, Tata Steel, Maruti Suzuki India, Housing Development Finance Corp, State Bank of India, and Axis Bank. End

Edited by Deepshikha Bhardwaj

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