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Equity Futures: Short covering helps banks bounce back

Informist, Wednesday, Dec 1, 2021


By Vivek Kumar


MUMBAI – A bounce back after four sessions of fall today in the Nifty Bank index led to some investors covering their short positions in the sector, analysts said.


The open interest in the December futures of the Nifty Bank index fell 3.7% to 2.5 mln, and the sectoral index rose nearly 2% to close at 36364.90 points in the cash market.


As the index rose in the cash market, traders aggressively bought its out-of-the-money call options. The premiums of 36500, 36900, 37000 and 37500 points call options doubled today. All four contracts had witnessed selling last four sessions.


On the other hand, all major put options of the index witnessed sharp selling with their premiums dropping 70-90%.


While some analysts believe banks are in oversold territory and may see more gains going ahead, some termed today’s bounce back as just bargain buying and expect the sector to remain weak.


Among the top gainers in the sector today were ICICI Bank, State Bank of India, Axis Bank and IndusInd Bank, as they rose 1-6%. The out-of-the-money call options of these banks were bought today, while premiums of major put options fell.

With banks leading the gains, the benchmark Nifty 50 rose over 1% to 17166.90 points. The open interest in the index’s December futures contract rose nearly 5% to 11.8 mln as per provisional data, indicating some addition of long positions.


In the benchmark index’s options, traders bought 17200 points call options while selling 17400 and 17500 points call options. Among put options, 17100 and 16500 points strike prices witnessed maximum addition of open interest today and their premiums fell sharply.


-–Nifty 50 Dec ended at 17235.00, up 201.40 points; 68.10-point premium to spot index

-–Nifty 50 Jan ended at 17287.05, up 196.55 points; 120.15-point premium to spot index

-–Nifty 50 Feb ended at 17328.00, up 195.65 points; 161.10-point premium to spot index


The total turnover in the futures and options segment of the NSE was slightly lower at 76.2 trln rupees today, compared to 81.1 trln rupees on Tuesday.


The turnover in index options was 73.8 trln rupees compared to 78.1 trln rupees in the previous session. The total premium turnover of index and stock options was also lower at 320.6 bln rupees, compared to 403.8 bln rupees on Tuesday.


ICICI Bank, Reliance Industries, Tata Power Co, Tata Motors, Axis Bank, IndusInd Bank, Tata Steel, Bharti Airtel, Maruti Suzuki India, State Bank of India, HDFC Bank, Vodafone Idea, Tata Consultancy Services, Infosys and Indian Energy Exchange were some of the most actively traded underlying stocks.  End




Edited by Maheswaran Parameswaran



Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.


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Source: Cogencis

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