Equity Futures: Premiums across calls, puts fall ahead of MPC outcome

Informist, Wednesday, Feb 7, 2024

By Anjana Therese Antony and Anshul Choudhary

Stock Markets Climb With Focus On Inflation

MUMBAI – The derivatives chain showed that the Nifty 50 is seen sideways ahead of the Reserve Bank of India’s monetary policy outcome Thursday, with premiums across strike prices of call and put contracts crashing. As per options data, the Nifty 50 may find support at 21700 points and face resistance at 22000 points. The 50-stock index closed largely flat or 1.10 points higher at 21930.50 points. “I think it is more or less priced in that the RBI will maintain status quo,” Narendra Solanki, head of fundamental Research – investment services at Anand Rathi Share and Stock Brokers said.

“I do not expect any change in interest rates and would be looking at their stance on inflation and what they think about the trajectory (of inflation),” Solanki said. As per a poll of economists, treasury heads, and analysts by Informist, the central bank is expected to leave the policy repo rate steady for the sixth consecutive time, while more focus will be on its stance of ‘withdrawal of accommodation’.

Coming back to the options chain of Nifty 50, premiums at and above call contracts of 20000-point strike, expiring Thursday, plunged. This level has the highest open interest concentration of 9.16 mln and the third-highest open interest addition of 4.23 mln. At the 22100-point strike, the premium declined by nearly 44 rupees to 21.30 rupees and this level has the second-highest addition of open interest.

On the puts front, premiums at and below 21900 points also tumbled. At this level, the premium dropped nearly 62 rupees to 41 rupees, and this level has the maximum open interest concentration and second-highest addition of positions. The premium of 21800-point put contracts also fell, down 73 rupees to 18.85 rupees and has the third-highest concentration of open interest.

On the futures front, the February contracts of the Nifty 50 was up 39.75 points or 0.2% at 22019.30 points, which is at an 88.80-point premium to the closing level of the 50-stock index. Open interest increased 2.7% to 12.38 mln.

Further, the Nifty Bank is also expected to move in a 500 points range between 45500 and 46000, Mehul Kothari, assistant vice president of technical research at Anand Rathi Share and Stock Brokers, said. Today, the bank index closed higher by nearly 128 points, or 0.3%, at 45818.50 points, with eight out of 12 constituents ending in the green.

–Nifty 50 Feb closed at 22019.30, up 39.75 points; 88.80-point premium to spot index

–Nifty 50 Mar closed at 22170.00, up 49.95 points; 239.50-point premium to spot index

–Nifty 50 Apr closed at 22298.80, up 42.75 points; 368.30-point premium to spot index

State Bank of India, Trent, HDFC Bank, Indian Oil Corp, Canara Bank, DLF, Steel Authority of India, Power Finance Corp, Reliance Industries, Bank of Baroda, and ICICI Bank were the most actively traded underlying stocks today. End

Edited by Tanima Banerjee

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Source: Cogencis