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Equity Futures: Options data hint at caution with positive bias

Informist, Wednesday, Nov 29, 2023

 

By Akshata Gorde

 

MUMBAI – The monthly options contract of the Nifty 50 index expiring on Thursday indicated a clear bullish trend in the overall market, but also left room for some correction after the spot index crossed the psychological 20000-point mark today.

 

Traders covered their short positions and bought out-of-the-money call options across 20100-20450 strike prices amid buoyed sentiment in the spot market. Aggressive put writing was seen at 20000 strike price of the Nifty 50 index, making it a strong support for Thursday, with the highest open interest addition of 14.4 mln contracts.

 

However, analysts expect some cooling off as the put-call ratio indicates an overbought market. “After such a range expansion, some correction is likely up to 19900-19850 points on Thursday,” said Viraj Vyas, technical and derivatives analyst at Ashika Stock Broking Ltd.

 

“There is more space for taking short positions in the market now, with 20200 points as the last hope for bear traders, above which short traders will be forced to exit the market completely,” Vyas said. Technical analysts expect the index to move up to 20800 points if the Nifty 50 crosses 20200 points.

 

Ruchit Jain, lead technical analyst at 5Paisa, and Vyas both pointed out that as of Nov 28, 76% of foreign institutional investor bets on index futures were bearish because of the likely larger “risk reward” for short traders.

 

The premium on the 20200 call strike, which had the highest open interest addition of 5 mln contracts today, rose by 985.7% to 19 rupees. On the put side, the premium on the 20000 strike price fell 88.3% to 11 rupees.

 

Today, the Nifty 50 closed 1% higher at 20096.60 points after opening marginally higher on the back of gains in banking heavyweights HDFC Bank, ICICI Bank, and Axis Bank. The index closed 125.85 points shy of its lifetime high of 20222.45 points. Technical analysts expect the index to find support at 20000 points and see resistance at 20200 points.

 

Another worrying factor was India VIX, popularly known as the “fear gauge”, which closed 4.4% higher at 12.7075 points after hitting a six-month high of 14.4600 points today. While India VIX usually reacts in contrast to the spot market, Vyas said it seemed to have risen today because of hedges made by investors.

 

–Nifty 50 Nov closed at 20143, up 206.30 points; 46.40-point premium to spot index

–Nifty 50 Dec closed at 20267, up 213.85 points; 170.40-point premium to spot index

–Nifty 50 Jan closed at 20379.90, up 217.95 points; 283.30-point premium to spot index

 

Today, HDFC Bank, Reliance Industries, ICICI Bank, Zee Entertainment Enterprises, Axis Bank, Tata Motors, and State Bank of India were among the more actively traded underlying stocks.  End

 

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

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© Informist Media Pvt. Ltd. 2023. All rights reserved.

Source: Cogencis

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