Informist, Wednesday, Mar 9, 2022
By Joe Milton
MUMBAI – The Nifty 50 index bounced back as market sentiment improved after news reports said Ukrainian President Volodymyr Zelensky was no more interested in North Atlantic Treaty Organization membership for his country, a key reason why Russia went to war with its neighbour. This calmed investor nerves and triggered short covering. Analysts now expect the index to face a resistance at 16800 points.
Reports of Russian Foreign Minister Sergei Lavrov meeting his Ukrainian counterpart Dmytro Kuleba in Turkey on Thursday also aided investor sentiment.
Intraday, bargain buying in heavyweight stocks and short covering by traders pushed the Nifty 50 index beyond 16400 points. However, the 50-stock index came off day's high and closed 2.1% up at 16345.35 points.
"There was some respite in the second half of the day on the back of short covering in the domestic market as well as recovery seen in global markets," said Siddhartha Khemka, head, retail research, Motilal Oswal Financial Services.
The comeback was much stronger in the European markets with Germany's DAX Performance index and France's CAC 40 index surging about 5% each.
In the derivatives segment, open interest in the March futures of Nifty 50 surged 8.3% to 13.6 mln, suggesting an addition of long positions and simultaneous covering of short positions.
In the call options segment of the Nifty 50 index expiring on Thursday, traders unwound their positions across 15800-16200 strike prices as the index comfortably surpassed 16300 points.
Today, call writers in the Nifty 50 index were active at the 16800 strike price and analysts expect the index to face a resistance at this level, going forward.
The headline index is expected to find immediate support at 16200 points as the maximum addition of open interest in the put options segment of Nifty 50 was at this strike price.
Though options sellers of Nifty 50 became active and premiums fell, the volatility index--India VIX--continued to trade at an elevated level of around 28 points. Owing to this, analysts are sceptical to say a trend reversal has happened and expect the market to remain volatile in the near term.
Among sectors, Nifty Bank index gained nearly 2% and closed at 33815.45 points on short covering, after touching an intraday high of 33969.50 points.
If the Nifty Bank index surpasses 34000 points comfortably, it may lead to further short covering towards 35000 points, said Santosh Meena, head of research, Swastika Investmart.
On the stock-specific front, Reliance Industries, Bajaj Finance, Asian Paints, and HDFC Bank were among the top gainers and open interest in the March futures of these stocks was up, indicating formation of long positions.
--Nifty 50 Mar ended at 16385.00, up 374.10 points; 39.65-point premium to spot index
--Nifty 50 Apr ended at 16428.00, up 377.80 points; 82.65-point premium to spot index
--Nifty 50 May ended at 16456.40, up 360.15 points; 111.40-point premium to spot index
The total turnover in the futures and options segment of the National Stock Exchange was 89.3 trln rupees, compared with 69.3 trln rupees on Tuesday.
The turnover in index options was 86.3 trln rupees against 66.2 trln rupees in the previous session. The total premium turnover of the index and stock options was 518.1 bln rupees, compared with 583.1 bln rupees on Tuesday.
The most actively traded underlying stocks were ICICI Bank, Reliance Industries, Tata Motors, HDFC Bank, Axis Bank, Infosys, Bajaj Finance, Maruti Suzuki India, State Bank of India, and Kotak Mahindra Bank. End
Edited by Deepshikha Bhardwaj
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