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Equity Futures: Limited downside seen for Nifty 50; support at 16800

Informist, Monday, Mar 21, 2022

 

By Ankika Biswas

 

MUMBAI– Analysts believe more losses are on the cards for the Nifty 50, after re-escalating crude oil prices dented investor sentiment and pulled the index below multiple support levels today. However, the downside may be limited if derivatives data is anything to go by, they say.

 

Snapping a two-day gaining streak, the Nifty 50 slipped below the 17100-point mark today. Consequently, analysts feel the selling pressure in the headline index may continue and pull it below 17000 points, as evident from the buying of put option at this strike price.

 

But the index’s downside will be restricted to the 16800-point mark as some buying can trickle in at this level, said Ruchit Jain, trading strategist at 5paisa.com. Strong build-up of open interest was seen at this strike-price put option today.

 

Today, the Nifty 50 closed nearly 1% lower at 17117.60 points, after testing an intra-day low of 17096.40 points.

 

However, action in the futures segment was comparatively muted. The near 2% rise in open interest of the March futures contract suggested the covering of long positions and build-up of fresh short positions.

 

Among sectors, while most witnessed selling pressure, the metals pack rose on prospects of price hikes and improved earnings owing to the rise in global metal prices. Consequently, bullish bets were seen in Vedanta and Coal India.

 

Jain, who believes that the trends for both stocks are positive, recommended existing traders hold on to their positions and new entrants use any dips as a buying opportunity.

 

The strategist sees Coal India testing the 200-rupee mark, while Vedanta is expected to rise to 415-420 rupees. The stocks ended 3% and 6% higher at 182.30 rupees and 400.05 rupees today, respectively.

 

Meanwhile, shares of Petronet LNG slumped nearly 6% following a ratings downgrade by investment bank Morgan Stanley to ‘underweight’ from ‘equalweight’, triggering bearish bets in the derivatives segment.

 

As the short-term trend remains negative with strong volumes accompanying the stock’s fall, analysts expect it to fall to 190 rupees and underperform its sectoral peers. Today, the scrip closed nearly 6% lower at 194.85 rupees.

 

–Nifty 50 Mar ended at 17167.85, down 154.20 points; 50.25-point premium to spot index

–Nifty 50 Apr ended at 17224.90, down 145.45 points; 107.30-point premium to spot index

–Nifty 50 May ended at 17261.25, down 142.30 points; 143.65-point premium to spot index

The total turnover in the futures and options segment of the National Stock Exchange was at 50.01 trln rupees today, lower than 167.8 trln rupees on Thursday.

The turnover in index options was about 46.47 trln rupees, against 164 trln rupees in the previous session. The total premium turnover of index and stock options was 366.51 bln rupees compared with 434.1 bln rupees on Thursday.
 
The most actively traded underlying stocks were Vedanta, Reliance Industries, HDFC Bank, Maruti Suzuki India, Infosys, Tata Motors, Tata Steel, Infosys, and ICICI Bank. 

End

 

Edited by Pranav S. Joshi

 

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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© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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