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Equity Futures: Options hint at stiff resistance ahead for Nifty 50

Informist, Friday, Aug 12, 2022


By Joe Milton


MUMBAI – The Nifty 50 index struggled to sustain above 17700 points and ended a notch below this level today. Options data indicate that the index will continue to face stiff resistance to surpass and decisively cross the 17700-point level in the coming week. 


The headline index touched an intraday high of 17724.65 points, but came off highs and closed 0.2% higher at 17698.15 points. 


Today, significant open interest buildup was seen in the 17700-strike call options contract expiring on Aug 18. The highest open interest in this segment was at 17800 points. 


“Despite the proximity to the resistance level, the trend remains strong,” said Rupak De, senior technical analyst at LKP Securities. 


Nifty 50 will face stiff resistance in the 17750-17800-point zone, while a decisive breakout above 17800 points may induce further gains in the market, De added. 


On the downside, the Nifty 50 index is expected to witness more selling pressure if it falls below 17600 points, and analysts see strong support around 17300 points. 


In the put options segment of Nifty 50 expiring on Aug 18, the highest open interest was at 17700 strike price followed by 17500 and 17600 strikes.


Open interest in the August futures of Nifty 50 rose only 2.5% to nearly 11 mln, as traders refrained from taking aggressive positions. 


On the stock-specific front, open interest in August futures of Oil and Natural Gas Corp surged 11% to about 52 mln on the expectation of strong earnings. 


However, call writers remained intact at the 140-rupee strike price, and analysts expect the stock to face resistance around this level. 


Today, the stock failed to hit the 140-rupee level and closed nearly 5% higher at 139.20 rupees. 


–Nifty 50 Aug closed at 17716.90, up 31.95 points; 18.75-point premium to spot index

–Nifty 50 Sep closed at 17780.00, up 26.85 points; 81.85-point premium to spot index

–Nifty 50 Oct closed at 17825.00, up 35.65 points; 126.85-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange was about 60.2 trln rupees compared to 211.2 trln rupees on Thursday.    


The turnover in index options was 56.3 trln rupees against 207.9 trln rupees on Thursday. The total premium turnover of the index and stock options was 305.7 bln rupees compared to 387.9 bln rupees in the previous session. 


HDFC Bank, ICICI Bank, Tata Chemicals, Bharat Forge, Divi’s Laboratories, State Bank of India, Info Edge India, Reliance Industries, Adani Enterprises, and Tata Motors were among the most actively traded underlying stocks.  End


Edited by Shirsha Thakur


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Source: Cogencis

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