Informist, Monday, Oct 9, 2023
By Padmini Dhruvaraj
MUMBAI – Investors placed short bets across strike prices as the Nifty 50 declined in the spot market on fears that the surprise attack by Palestinian militant group Hamas on Israel could further dampen the struggling global economy.
The 50-stock index opened lower, snapping a two-day winning streak, but recouped some of its intraday losses. Eventually, the index ended 0.7% lower at 19512.30 points.
"Investors dumped equity assets as they turned risk off on concerns that a face-off between Israel and Hamas could further deteriorate the global economy already reeling under higher interest rates and stubbornly high inflation," said Shrikant Chouhan, head of research at Kotak Securities Ltd.
Additionally, the India VIX, popularly known as the fear gauge rose 10.6% to 11.40 points. "The VIX shot up today because the relief rally was disturbed due to the weakness in the global markets," said Viraj Vyas, market technician and derivatives analyst at Ashika Group.
Premiums of both in-the-money and out-of-the-money put options rose, mirroring the negative sentiment in the market. The 19500 strike price had the highest net change in open interest, with 1.18 mln new positions being added. Additionally, some aggressive put selling was seen at 18700 and 19100 strike prices.
However, analysts said some put writing was seen around at-the-money - 19500 - strike prices during the second half of the session.
Raj Vyas, vice-president of research at Teji Mandi said there is no cause for panic as far as the Indian stock market is concerned, but the domestic indices will mirror the movements in the global markets. "At the moment we are not concerned because this Israel-Hamas is an evolving situation and needs to be tracked for a couple of days before we react to it," he added.
On the call front, writing was seen across strike prices, reflecting the bearish sentiment. The 19800 strike price had the highest open interest addition today with 3.94 mln new positions. The premium of the strike, however, declined 75.7% to 7.55 rupees.
The October futures contract of the Nifty 50 today closed at a premium of 9.65 points to the spot index. Open interest in the contract rose 2.35% to 10.84 mln, according to provisional data.
After today's sell-off, analysts said the immediate resistance for the Nifty 50 has slipped to 19600 from 19800 and the index will find support at 19480 points, "below the same it could retest the level of 19400-19390," said Chouhan.
--Nifty 50 Oct closed at 19522.00, down 156.50 points; 9.65-point premium to spot index
--Nifty 50 Nov closed at 19640.00, down 152.15 points; 127.65-point premium to spot index
--Nifty 50 Dec closed at 19750.35, down 150.45 points; 238.00-point premium to spot index
Tata Consultancy Services, Multi Commodity Exchange, Reliance Industries, Infosys, Adani Ports and Special Economic Zone, Hero MotoCorp, Bajaj Finance, Dr Reddy's Laboratories, and State Bank of India were among the most actively traded underlying stocks today. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bhardwaj
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