Informist, Thursday, May 25, 2023
By Anshul Choudhary
MUMBAI – The Nifty 50 rose sharply in the final hour of today’s trading session and closed above 18300 level, prompting traders to buy call options at this strike price. However, there is no consensus among analysts that Nifty 50 will shed all of its weakness in the coming week, while some were hesitant of advising investors to buy on dips unlike what they said last week.
“Even though market closed higher today, the overall weakness is unlikely to go away anytime soon,” said Raj Deepak Singh, head of derivatives research at ICICI Securities. “I expect limited upside for Nifty 50 as I am also seeing that June futures contract (for Nifty 50) ended around 18400 points.”
Further, he added that traders have paid high cost to roll over their long positions, which would limit people’s earnings.
Some analysts believe that Nifty 50 will find support at 18200 points, while others expect the index to fall even further to 18100 points. Analysts say there aren’t enough domestic triggers for the market to show sustained gains. Nevertheless, on the higher side, Nifty 50 is seen rising up to 18450-18500 points by the next weekly expiry of options contracts on Jun 1.
Today, Nifty 50 closed 0.2% higher at 18321.15 points.
Owing to upward movement in the Nifty 50, traders bought call options contracts at 18200-18300 strike prices for the week expiring Jun 1. Premium at call options of 18200 strike price rose by 18.7 rupees to 206.45 rupees, while premium at call options of 18300 rose by 8.3 rupees to 131.10 rupees.
On the put side, traders sold these contracts when the spot Nifty 50 index rose. Premium at 18200 strike price fell by 28 rupees to 40 rupees, while premium at 18300 strike price fell by 35.40 rupees to 69.25 rupees.
The June futures contract of the Nifty 50 closed at a premium of 106.85 points to the spot index today. Open interest in the contract rose 43.4% to 9.64 mln, as per provisional data.
–Nifty 50 Jun closed at 18428.00, up 29 points; 106.85-point premium to spot index
–Nifty 50 Jul closed at 18500.00, up 50.55 points; 178.85-point premium to spot index
Reliance Industries, Adani Enterprises, Kotak Mahindra Bank, State Bank of India, and Infosys were among the more actively traded underlying stocks.
End
Edited by Tanima Banerjee
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