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Equity Futures:Surpassing 16400 pts key for further gains in Nifty 50

Informist, Friday, May 27, 2022


By Abhishek Saini


MUMBAI – The Nifty 50 index continued its up move for the second session today, and bets in the derivatives segment suggest that the index could move even higher. However, market participants see 16400-point as a key hurdle for the Nifty 50. 


The 50-stock index ended 1.1% higher at 16352.45 points today.


After covering short positions on Thursday, traders added long positions today, provisional data indicated. The open interest in the June futures contract rose 2.5% while the contract ended 1.1% higher. 


Data showed that 78.8% positions in the Nifty 50 were rolled over to June series. This was broadly in-line with the three-month average rollover of 79.7%. 


In the options segment, selling was seen in put options of 16300- and 16000-point strike prices. These contracts saw a strong addition of open interest while their premium declined sharply. 


Among call options, traders purchased 16300-16600-point strike prices, betting on the index to move towards these levels. However, analysts said that the index needs to surpass 16400 points for any sustained gains. 


The 16400 points level acted as a resistance today, and unless it breaks that barrier, chances of profit taking remain, said Bhuvan Jindal, derivatives analyst, Edelweiss Wealth Management. 


If it sustains above 16400-16450 points in the next 2-3 sessions, we can expect it to move first to 16700 points, then towards 17000 points, Jindal added. On the lower side, Jindal expects support for Nifty 50 at 16300 points. 


In stock-specific action, Piramal Enterprise saw aggressive bearish bets in derivatives segment after the stock tumbled 12% today on account of disappointing Jan-Mar results. 


The stock fell to a 15-month-low of 1,586 rupees as the company’s financial services segment reported a net loss during the March quarter. 


With the stock falling, traders purchased out-of-the-money put options at strikes such as 1,500- and 1,400-rupee, and their premiums trebled. 


Although, the put option with 1,600-rupee strike price held the highest open interest concentration, and analysts see the level as strong support. 


Meanwhile, call writing was seen at 1,800-rupee strike price as traders anticipated the stock to remain below the level. The negative trend was seen in the June futures contract as well which saw open interest increase by 28%, indicating a build-up of short positions. 


If the stock does not make a move towards 1,700-1,750 rupees in the next session, there is room for another 15% correction, said Jindal.


Today, the stock ended 11.8% lower at 1,645.30 rupees. 


–Nifty 50 Jun ended at 16338.00, up 169.90 points; 14.45-point discount to spot index

–Nifty 50 Jul ended at 16355.00, up 171.25 points; 2.55-point premium to spot index

–Nifty 50 Aug ended at 16386.00, up 23.20 points; 33.45-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange was 48.56 trln rupees, compared with 225.38 trln rupees on Thursday.


The turnover in index options was 46.29 trln rupees, compared with 221.32 trln rupees in the previous session. The total premium turnover of index and stock options was 357.41 bln rupees, compared with 506.73 bln rupees on Thursday.

The most-actively traded underlying stocks were Reliance Industries, HDFC Bank, Infosys, Tata Steel, Bajaj Finance, Hindalco Industries, Tata Motors, Bharti Airtel, Apollo Hospitals Enterprise and Tata Consultancy Services.  End


Edited by Maheswaran Parameswaran


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Source: Cogencis

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