Informist, Tuesday, Jun 13, 2023

By Neeshita Beura

MUMBAI – Traders sold put options at and below 18700-point strike price of the Nifty 50 today indicating that they do not expect the market to give up gains seen today.

In put options, premiums on the 18450-18700 strike price contracts fell as the Nifty 50 closed 0.6% higher at 18716.15 points. However, premium on the 17000 strike price rose marginally.

According to an analyst with Indicharts.com, some speculative buying could have happened at the 17000 strike, which is far out of the money. "People might be taking a punt and expecting a bad outcome and hawkish commentary on Wednesday from the US Federal Reserve regarding rate hikes," he said.

On the call front, 18700 strike saw a high addition of new contracts. "A lot of put writing was seen at 18700 put which indicates that it could be good support for Nifty 50 in the near term," the analyst said.  

The call options contract of 18750 strike price saw a rise in premium, indicating that the Nifty 50 could reach that level by the day of the weekly derivatives' expiry on Thursday. The premiums on 18750 strike rose by 18.3 rupees to 43.3 rupees.

However, the 18900 strike premiums rose marginally by 0.5 rupees to 5.05 rupees, indicating that it is less likely for the Nifty 50 to rise to that level by Thursday. Premiums on 18950, 19000, and 19100 strike price call options also fell marginally.

The Indicharts.com analyst pointed out that when the spot market fails go beyond a resistance level, the value of far-off call options keeps eroding despite a rise in the Nifty 50 because of the time value of money.

For Wednesday, the support for Nifty 50 is seen at 18600 points and the resistance is seen at 18800 points.

On the global front, investors await US consumer price inflation data and the US Federal Reserve's rate decision on Thursday for more cues going ahead.

When it comes to the Nifty Bank, the index has been range-bound for the past few days. The support for the index is seen at 43800 points and the resistance is seen at 44500 points for Wednesday. Today, the Nifty Bank ended 0.3% higher at 44079.85 points in the cash market. 

The June futures contract of the Nifty 50 closed at a premium of 59.15 points to the spot index today. Open interest in the contract rose 0.4% to 9.16 mln, according to provisional data.

--Nifty 50 Jun closed at 18775.30, up 92.30 points; 59.15-point premium to spot index

--Nifty 50 Jul closed at 18857.00, up 86.95 points; 140.85-point premium to spot index

--Nifty 50 Aug closed at 18941.50, up 77.95 points; 225.35-point premium to spot index

Reliance Industries, HDFC Bank, Kotak Mahindra Bank, Tata Communications, Zee Entertainment Enterprises, ICIC Bank, Dixon Technologies, Axis Bank, Tata Motors, State Bank of India, and Infosys were amongst the most actively traded underlying stocks.  End

Edited by Aditya Sakorkar

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