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Wednesday, October 4, 2023

Equity Futures: Options indicate Nifty 50 may touch 18000 near term

Informist, Tuesday, Aug 30, 2022


By Joe Milton


MUMBAI – The Nifty 50 recouped Monday’s losses and closed well above 17700 points due to covering of short positions and strong buying in heavyweight counters.


Amid strong gains, options traders shifted to higher strike prices indicating the index may head towards 18000 points in the coming sessions.


Equities witnessed a sharp fall on Monday after US Federal Reserve Chairman Jerome Powell said the central bank would continue to hike interest rates to control inflation. 


However, equities staged a strong bounce back today with the Nifty 50 closing 2.6% higher at 17759.30 points after touching an intraday high of 17777.65 points. 


Open interest in the September futures of Nifty 50 surged 7.6%, while the contract rose 2.6%. Analysts said both fresh long positions and covering of short positions were witnessed today. 


In the call options segment of Nifty 50 expiring on Thursday, traders squared off their positions across 17400-17700 strike prices and the highest open interest was at 18000 strike price. 


Today, the Nifty 50 September futures closed above 17800 points. On the back of this, more follow-up buying can be expected which might take the index towards 18100 points in the near term, said Ratnesh Goyal, senior technical and derivative analyst at Arihant Capital Markets. 


In the put options segment, significant build-up of open interest was seen at 17500 strike price. 


“As the market inched higher put writing was seen at 17600 and 17500 strikes which would now be seen as immediate support,” said Ruchit Jain, lead research analyst, 5paisa.com.


Goyal suggested that any fall in the Nifty 50 towards 17500 points can be used to create long positions.


Among sectors, financial stocks contributed to a bulk of the gains in the Nifty 50 index. Heavyweight bank stocks like ICICI Bank and HDFC Bank gained over 3% which aided the Nifty Bank index to end 3.3% higher at 39536.75 points. 


The highest open interest in the call options segment of Nifty Bank index expiring on Thursday was at 40000 strike price, which is expected to act as an immediate resistance. 


However, analysts expect the Nifty Bank index to hit a new record high if it breaches 40000 points decisively. The index touched its lifetime high of 41829.60 points in Oct 2021.


–Nifty 50 Sep closed at 17823, up 452.75 points; 63.70-point premium to spot index

–Nifty 50 Oct closed at 17875, up 449.20 points; 115.70-point premium to spot index

–Nifty 50 Nov closed at 17931, up 440.10 points; 171.70-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange rose to about 147 trln rupees from 93.4 trln rupees on Monday. 


The turnover in index options was at 143.7 trln rupees compared to 91 trln rupees on Monday. The total premium turnover of the index and stock options was 543.7 bln rupees compared with 457 bln rupees in the previous session.


Reliance Industries, Adani Enterprises, HDFC Bank, Bajaj Finserv, Maruti Suzuki India, ICICI Bank, Escorts, Bajaj Finance, State Bank of India, Piramal Enterprises, and Adani Ports and Special Economic Zone were among the most actively traded underlying stocks. End


Edited by Maheswaran Parameswaran


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Source: Cogencis

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