Equity Futures: Bets in out-of-the-money calls as Nifty 50 rises more

Informist, Thursday, Dec 28, 2023

By Anjana Therese Antony

MUMBAI – With the benchmark equity indices rising for the fifth straight session and hitting new record intra-day as well as closing highs, traders bought out-of-the-money call options of Nifty 50, expiring on Thursday. Open interest additions at and above 22000-point strike price of call options of Nifty 50, along with rise in premiums, hinted that the current bull run is likely to spill over to Friday as well as next week, said a technical analyst at a broking firm. The 50-stock index closed at 21778.70 points today.

“Markets witnessed bullish bets on the monthly F&O expiry day, indicating that the risk-on sentiment is likely to continue going ahead on hopes of a strong local macro play in the new year,” Prashanth Tapse, senior vice president of research at Mehta Equities, said in a post-market note.

Two more analysts said that foreign investors turning net buyers in the Indian market on Wednesday also likely boosted the sentiment today. FIIs were net sellers in the domestic market for six consecutive sessions till Tuesday.

Support for the Nifty 50 is pegged at 21650-21600 points and resistance at 21850-21900. Few technical analysts said that the index could drive towards its new psychologically important level of 22000 points if it crosses 21800 points.

Amid the bullish journey, traders bought out-of-the money call options of Nifty 50. The 22500-point strike price saw the highest concentration and maximum addition of open interest. The premium of these contracts, expiring next week, rose by 2.70 rupees to 8.80 rupees.

Open interest additions and concentrations were also observed at strike prices 22100 and 22000, whose premium were at 57.65 rupees and 87.35 rupees, respectively.

On the puts side, some selling pressure was seen across strikes. Contracts of 21500 points has the highest addition and concentration of open interest. The premium of these contracts dropped by 30.45 rupees to 53.70 rupees.

Meanwhile, the December futures contracts of the Nifty 50 closed at a 2.30-point premium to the spot market. Open interest declined by nearly 28% to 4.49 mln.

On Friday, the market is expected to hit a new record high and end the year’s last trading session in the green.

–Nifty 50 Jan closed at 21930.05, up 75.95 points; 151.35-point premium to spot index

–Nifty 50 Feb closed at 22058.00, up 71.05 points; 279.30-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, State Bank of India, Tata Motors, ITC, Vodafone Idea, Kotak Mahindra Bank, Hindustan Copper, and Bajaj Finance were among the more actively traded underlying stocks.

End

With inputs from Padmini Dhruvaraj

Edited by Maheswaran Parameswaran

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