Informist, Tuesday, Jun 21, 2022
By Ankika Biswas
MUMBAI – As the Nifty 50 comfortably breached the crucial level of 15500 points today, sellers of call options shifted their bets to higher strike prices, anticipating more gains for the headline index.
Covering their positions at lower strike prices, traders opted for call options across 16100-16250 points, resulting in a double-digit rise across their premiums.
If the 50-stock index manages to edge higher today, it is likely to face some resistance at 15800 points, breaching which even 16000 points is likely, said Ruchit Jain, a trading strategist at 5paisa.com.
However, much of the movement in headline indices will hinge on the minutes of the Reserve Bank of India’s June policy meeting, due on Wednesday. In case of a fall, the Nifty 50’s support is seen at 15500 points, as per strong open interest build-up at that strike price put option.
However, Jain advised for a cautious approach from a medium-term perspective, as the trend remains weak and the Nifty 50 has a lot of ground to cover before a reversal sets in. Today’s gains were largely a result of covering of short positions.
Today, the index closed nearly 2% higher at 15638.80 points, after it breached the 15700-mark earlier.
Covering of short positions was also seen in the June futures contract of the Nifty Bank index, as open interest fell over 4% today. Despite gaining nearly 3% intraday, the index came sharply off-highs during the latter part of the day due to profit booking at higher levels.
Jain believes the Nifty Bank will continue to move in line with the Nifty 50, but any sharp gains are unlikely. He expects a follow-up pullback towards 34000 points in the sectoral index.
Today, the Nifty Bank closed 1.6% higher at 33191.75 points, after it rose to 33593.80 points earlier.
Among its constituents, strong covering of short positions was seen in public-sector banks including State Bank of India, Bank of Baroda and Punjab National Bank. Meanwhile, long positions were added in ICICI Bank.
–Nifty 50 Jun closed at 15633.40, up 285.75 points; 5.40-point discount to spot index
–Nifty 50 Jul closed at 15643.80, up 282.15 points; 5.00-point premium to spot index
–Nifty 50 Aug closed at 15680.00, up 286.15 points; 41.20-point premium to spot index
The total turnover in the futures and options segment of the National Stock Exchange was 94.75 trln rupees, higher than 67.61 trln rupees on Monday.
The turnover in index options was 91.51 trln rupees, higher than 64.41 trln rupees in the previous session. The total premium turnover of index and stock options was 431.90 bln rupees, higher than 392.49 bln rupees on Monday.
Reliance Industries, ICICI Bank, HDFC Bank, Tata Steel, Vedanta, Infosys, Tata Consultancy Services, Axis Bank, Adani Enterprises, and Tata Power were the most-actively traded underlying stocks.
Edited by Vidhi Verma
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