Informist, Monday, Oct 23, 2023

By Padmini Dhruvaraj 

MUMBAI – Investors placed fresh short bets between 19000-point and 19350-point strike prices of the put options expiring Thursday, as the bears dragged the Nifty 50 lower for the fourth straight session.

The 50-stock index opened lower today, tracking weakness in global equity markets, and extended its losses to hit a near two-month low of 19257.85 points. Eventually, the Nifty 50 index ended at 19281.75 points, down 1.3% from Friday's close.

"Benchmark indices witnessed severe pounding in the last hour trades as simmering geo-political tension in the Middle-East region triggered a wave of selling pressure and prompted investors to offload equity holdings," said Shrikant Chouhan, head of equity research at Kotak Securities. "Investors are already worried about further interest rate hikes and inflation, and with the addition of the Israel-Hamas conflict, the uncertainty has increased further and led to weak sentiment in global equities," he added.

Stocks across global markets also staged a retreat after the 10-year Treasury yield rose above 5.0%, the highest since 2007, as investors feared that higher borrowing rates would curb growth.

Premiums on out-of-the-money put options--19000-19350--rose, indicating investors expect the Nifty 50 to fall further in the next session. The out-of-the-money 19200 strike price had the highest net change in open interest with 1.41 mln new positions being added. The premium on the contract rose a whopping 324% to 60 rupees. 

Meanwhile, aggressive put options selling was seen at 17750, 18000, and 18500 strike prices. The 18500 strike price had the second-highest open interest addition today at 1.24 mln.

On the call options front, premiums across strikes declined, mirroring the negative trend in the market. The 19500 strike price attracted the highest open interest addition of 6.94 mln new positions today, while the premium on the strike fell 87.8% to 13.65 rupees.

On the futures front, the October contract of the Nifty 50 today closed at a discount of 18.85 points to the spot index. Open interest in the contract fell 1.9% to 8.52 mln, according to provisional data.

Going forward, analysts expect the Nifty 50 to fall further, placing the 19200 level as the immediate support and 19500 as resistance. "On the derivatives front, the strikes of 19600 and 19500 saw the addition of the highest call open interest indicating the zone to act as immediate resistance," said Avdhut Bagkar, technical and derivatives analyst at StoxBox.

--Nifty 50 Oct closed at 19262.90, down 264.95 points; 18.85-point discount to spot index

--Nifty 50 Nov closed at 19375.00, down 279.15 points; 93.25-point premium to spot index

--Nifty 50 Dec closed at 19485.00, down 95.60 points; 203.25-point premium to spot index

Reliance Industries, Bajaj Finance, ICICI Bank, HDFC Bank, Tata Motors, Adani Enterprises, IPCA Laboratories, Dr Reddy's Laboratories, State Bank of India, Tata Consultancy Services, and Maruti Suzuki were among the most actively traded underlying stocks.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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