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Equity Futures:Nifty 50 above 16500 spurs covering of short positions

Informist, Wednesday, Jul 20, 2022


By Ankika Biswas


MUMBAI – Traders covered short positions and also added a few long ones in the derivatives segment of the Nifty 50 today, as the headline index gained over 1% and closed above the 16500 mark, analysts said.


Although some profit taking is likely after the recent gains, the fall is seen limited as the short-term trend remains positive. It is seen drawing strong support at 16300-16350 points, going by the good build-up of open interest at these strike price put options.


Managing to retain the gains may see the headline index inch higher towards 16700 points, analysts said. The highest open interest addition was seen at that strike price call option today. 


Open interest in the July futures contract was down over 5%, suggesting a combination of both covering of short positions and addition of long ones, according to analysts.


Today, the Nifty 50 closed 1.1% higher at 16520.85 points, after hitting 16588 points in early trade. It has risen nearly 4% in the four straight days of gains.


The upmove was largely on the back of a sharp rise in shares of Reliance Industries and Oil and Natural Gas Corp following a cut in windfall tax on crude and export duty on fuel, which came into effect today.


Consequently, traders covered their short positions and added long ones in the derivatives segment of RIL, analysts noted. This was indicated by the near 1% fall in open interest in the July futures contract. 


Going forward, any follow-up buying will be closely watched, as lack of this saw the stock close off the day’s highs today. It closed nearly 3% higher at 2,503 rupees, after rising to 2,542.50 rupees.


Continued buying may see RIL test 2,600 rupees, analysts said.


Meanwhile, only marginal long positions were seen in ONGC today, coupled with lack of any follow-up buying. Open interest in the July futures contract rose over 3% today.


Analysts expect the stock to continue facing a hurdle at the 140-rupee mark and see it trading within the range of 125-140 rupees. Today, it closed nearly 4% higher at 132.55 rupees.


–Nifty 50 Jul closed at 16494.50, up 147.55 points; 26.35-point discount to spot index

–Nifty 50 Aug closed at 16506.00, up 144.30 points; 14.85-point discount to spot index

–Nifty 50 Sep closed at 16550.00, up 131.80 points; 29.15-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange was about 117.04 trln rupees, higher than 105.73 trln rupees on Tuesday.


The turnover in index options was 112.94 trln rupees, as against 102.389 trln rupees on Tuesday. The total premium turnover of index and stock options was at 399.31 bln rupees compared to 427.61 bln rupees on Tuesday.  


Reliance Industries, HDFC Bank, Hindustan Unilever, Infosys, Tata Consultancy Services, ICICI Bank, Tata Motors, Axis Bank, Vedanta, and Wipro were the most actively traded underlying stocks.  End


Edited by Avishek Dutta


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Source: Cogencis

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