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Equity Futures: Nifty 50 Jul at discount to spot on bearish bets

Informist, Tuesday, Jul 5, 2022


By Vidya Sreedhar


MUMBAI – The Nifty 50’s July futures contract slipped into a discount to the spot level today, as failure of the index to hold above the psychologically important 16000 point-mark triggered bearish bets. 


The Nifty 50’s July futures contract ended at a discount of nearly 45 points to the spot index, against a 2-point premium in the previous session, and open interest rose over 7% to 12.9 mln. This indicates build-up of short positions.  


In the spot market, the 50-stock index ended 0.2% lower at 15810.85 points, after touching a high of 16025.75 points during the day. Selling trickled in post noon, as European equities fell sharply and the dollar appreciated against the rupee. 


The Indian unit today ended at a record closing low of 79.37 against the greenback. The dollar index surged to a two-decade high in European trade.   


As the Nifty 50 struggled to sustain above 16000 points, call option writers turned active across out-of-the-money strike prices. As a result, the 15900, 16000, 16100, 16200, and 16300 strike prices saw premiums dropping 54-69%. 


Analysts have retained their view that unless the Nifty 50 makes a decisive move above 16100 points, the range-bound movement will continue. 


As selling pressure kicked in post noon, the banking pack fell prey to it. This saw the Nifty Bank snap a three-day gaining streak, and end 0.4% lower at 33815.90 points. 


Call option writers were active in out-of-the-money strike prices–34000, 34300, 35000, and 36000–pulling down their premiums by 25-67%. 


–Nifty 50 Jul closed at 15766.00, down 70.95 points; 44.9-point discount to spot index

–Nifty 50 Aug closed at 15796.00, down 66.30 points; 14.9-point premium to spot index

–Nifty 50 Sep closed at 15841.00, down 67.25 points; 30.2-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange surged to over 92 trln rupees today from 60.8 trln rupees on Monday. 


At over 90 trln rupees, the turnover in index options was higher than 59 trln rupees in the previous session. The total premium turnover of index and stock options was higher at 398 bln rupees, compared with 332 bln rupees on Monday.  


Reliance Industries, ICICI Bank, HDFC Bank, Tata Consultancy Services, Infosys, Bajaj Finance, Tata Motors, ITC, Adani Enterprises, and Housing Development Finance Corp were the most actively traded underlying stocks today.  End 


Edited by Avishek Dutta


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Source: Cogencis

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