Informist, Thursday, Feb 8, 2024
By Anshul Choudhary
MUMBAI – Heavy call writing was observed in options as markets failed to recover from a fall post Reserve Bank of India’s monetary policy outcome. Market participants were likely irked by the RBI not changing its stance from ‘withdrawal of accommodation’, hurting expectations of a rate cut, analysts said.
“We saw call writing at 21800 (for Nifty 50) and heavy (call) writing at 46000 for Nifty Bank,” said Om Mehra, technical analyst at SAMCO Securities. Today, the Nifty 50 closed at 21717.95 points, down over 200 points or nearly 1%. Mehra expects benchmark indices to remain weak on Friday.
For option contracts that expired today, the highest open interest on the call side was at 21750 strike prices. For contracts expiring next week, the highest open interest was at 22000, hinting towards expectations that the Nifty 50 index may recover next week. On the call side, premiums at 22000 strike prices fell 79 rupees to 91 rupees, that of 21900 fell 95 rupees to 128 rupees, and that of 21700 fell 124 rupees to 228 rupees.
On the put side, the highest open interest was at 21700 level for contracts that expired today. For contracts expiring next week, the highest open interest was at 21000 strike prices. Premiums at 21500 strike prices rose 28 rupees to 77 rupees, that of 21700 rose 50 rupees to 140 rupees, and that of 21800 rose 65 rupees to 186 rupees.
Options data suggest the Nifty 50 index is expected to move in a wide range of 21000-22000 points till next expiry.
Nifty Bank had a volatile session during the RBI Governor’s speech today and fell after he did not announce any measures to boost liquidity in the banking system. Traders added short positions after banks fell. Options data suggest a range of 45000-46000 points for Nifty Bank. Today, Nifty Bank closed 1.8% lower at 45012 points.
–Nifty 50 Feb closed at 21829.50, down 174.20 points; 111.55-point premium to spot index
–Nifty 50 Mar closed at 21977.95, down 168.05 points; 260-point premium to spot index
–Nifty 50 Apr closed at 22125, down 170 points; 407.05-point premium to spot index
State Bank of India, HDFC Bank, Trent, Canara Bank, Indian Oil Corp, and ICICI Bank, were the most actively traded underlying stocks today.
End
Edited by Maheswaran Parameswaran
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