Informist, Thursday, Aug 31, 2023
By Akshata Gorde
MUMBAI – Put build-up at 19000-18800 strike prices of the Nifty 50 show that a bearish trend is likely to play out in coming weeks due to concerns over global economic uncertainty, said analysts. However, traders have also bought put options at 19200 strike price expiring next week, which shows they expect the index to stay above this level.
The Nifty 50 index snapped its three-day winning streak and closed 0.5% lower at 19253.80 points today, dragged down by index heavyweights Reliance Industries and Axis Bank. However, the broader market outperformed the benchmarks, with Nifty Midcap and Nifty Smallcap indices closing 0.1-1.0% higher.
Analysts see investor focus shifting to mid-cap and small-cap stocks in a weak market. “We are seeing a gradual fall in the index amid mixed global cues. However, buoyancy on the broader front combined with selective buying across sectors is compensating in the interim,” said Ajit Mishra, senior vice president of technical research at Religare Broking Ltd.
Premium on put option of 19200 strike price rose 14.2% to 51 rupees, with an open interest addition of 2.49 mln contracts. This level acts as a critical support, breach of which will take the Nifty 50 further down to 18800 points, said Anshul Jain, senior technical analyst at Lakshmishree Investment and Securities.
At 19000 and 18800 strike prices, the premium rose by 19-23% from Wednesday to 20.25 and 8.60 rupees, respectively. There was also slight buying at 19300 and 19400 levels by bullish traders who expect the index to bounce back.
“For traders, 19220 would act as a sacrosanct support zone, and if the index trades above the same, it will bounce back till 19320-19380,” said Shrikant Chouhan, head of research at Kotak Securities. “On the flip side, below 19220, selling pressure is likely to accelerate and the index could slip till 19150-19125,” he added.
On the call side, there was selling at higher levels of 19800-19600 as traders shifted to lower levels of 19400-19500 strike prices factoring in the likely bearish trend. Premium on 19400 call option fell 12.9% to 86 rupees, with the maximum open interest build-up of 5.53 mln contracts. Premium on 19500 also fell by 17.9% to 45.75 rupees.
Traders have rolled over 58% of the Nifty 50 August futures contracts to the September series as of Wednesday, which is higher than the average of the past three expiries of 56%, according to brokerage Nirmal Bang.
Provisional data shows open interest in the September futures contract of the index surged by 42.3% at 10.66 mln, indicating addition of short positions in the derivatives market, said Jain.
–Nifty 50 Sep closed at 19428.30, down 17 points; 174.50-point premium to spot index
–Nifty 50 Oct closed at 19526, down 15.6 points; 272.20-point premium to spot index
HDFC Bank, Reliance Industries, State Bank of India, ICICI Bank, Tata Motors, Kotak Mahindra Bank, Maruti Suzuki India, IDFC First Bank, Axis Bank, Adani Enterprises, and ITC were among the most actively traded underlying stocks. End
Edited by Ashish Shirke
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