Informist, Monday, Dec 4, 2023
By Padmini Dhruvaraj
MUMBAI – Investors placed long bets across out-of-the-money strike prices of call options expiring on Thursday as the spot index scaled a fresh lifetime high today, fuelled by the Bharatiya Janata Party’s decisive win in the just-concluded Assembly elections.
The benchmark index opened 334 points higher today, extending the bull run for the fifth straight session, and hit an all-time high of 20702.65 points. Eventually, the 50-stock index closed 2.1% higher at 20686.80 points.
“The rally was on expected lines as the ruling party’s strong performance in state elections gave confidence to investors that culminated into a massive upsurge with key benchmarks scaling record highs,” said Prashanth Tapse, senior vice president of research at Mehta Equities.
Premiums of call options between 20700 and 21000 rose, indicating that the Nifty 50 will extend its bull run. “The Nifty and Sensex registered a fresh all-time high of 20702.65/68918.20. And it also formed a bullish candle on daily charts, which supports further uptrend from the current levels,” said Shrikant Chouhan, head of equity research at Kotak Securities Ltd.
The 20700 strike price of the call options had the second-highest open interest addition today with 2.74 mln new positions with its premiums rising a whopping 983.3% to 104 rupees. Meanwhile, some aggressive call selling was seen at 21200, 21300, and 21500 strike prices. The 21500 strike had the highest net change in open interest with 2.94 mln new contracts.
On the put side, premiums across strike prices fell, mirroring the bullish trend in the market. The 20500 strike had the highest open interest addition today with 7.32 mln new positions. The premium on the contract, however, fell 85.8% to 34.35 rupees. Additionally, some aggressive put selling was seen at 19800 and 19900 strike prices.
Going forward, analysts find 20500 as a support for the Nifty 50 and resistance as 20800. “On the derivative front, 20500 and 20600 PE (put options) strikes saw the highest addition of open interest indicating immediate support,” said Avdhut Bagkar, technical and derivatives analyst at StoxBox.
Meanwhile, the December futures contract of the Nifty 50 closed at a premium of 117.25 points to the spot index today. Open interest in the contract rose 9.41% to 10.88 mln, according to provisional data.
–Nifty 50 Dec closed at 20804.05, up 428.90 points; 117.25-point premium to spot index
–Nifty 50 Jan closed at 20925.00, up 432.20 points; 238.20-point premium to spot index
–Nifty 50 Feb closed at 21030.00, up 99.45 points; 343.20-point premium to spot index
HDFC Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank, Reliance Industries, Maruti Suzuki, Larsen & Toubro, Eicher Motors, IndusInd Bank, Adani Enterprises, and Power Finance Corp were among the more actively traded underlying stocks.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Vandana Hingorani
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