Informist, Friday, Dec 17, 2021
By Vivek Kumar
MUMBAI – Facing a double whammy of hawkish signals from central banks across the globe and resurgence of COVID-19 cases, traders placed aggressive short positions in domestic equities today, which were seen to a larger extent in the banking pack.
The open interest in December futures contract of the Nifty Bank index shot up nearly 15% to 2.7 mln today, indicating a build up of short positions.
The sectoral index dropped 2.5% to close at 35618.65 points in the cash market, its biggest fall in around three weeks.
Following the sharp fall in cash market, traders lapped up put options of the Nifty Bank index. Consequently, the premiums of 36000- and 35500-point put options of the index trebled in value.
Meanwhile, the premiums of 36000- and 36500-point call options slumped around 70% each.
The nearest support level for Bank Nifty is now at 35500-point level, which has the highest open interest on put side, said Shubham Sontakke, an independent technical analyst.
He recommended investors utilise the dips and initiate long positions in ICICI Bank, State Bank of India and Kotak Mahindra Bank as they are in oversold territory and their fundamentals are much stronger than peers.
With banks falling sharply, the ripple effect was also seen in the benchmark Nifty 50. The 50-stock index ended 1.5% lower at 16985.20 points, while the open interest in its December futures contract rose by nearly 5% to 11.3 mln.
In the benchmark index’s options, 18000- and 17200-point call option contracts witnessed maximum addition of open interest with their premiums falling around 25% and 65%, respectively.
On the put side, the open interest accumulation was highest at 17000- and 16500-point level and the premiums of both these contracts more than doubled.
Analysts expect the Nifty 50 to continue moving with sideways trend going ahead. However, if it breaches the support level of 16800-16850 points, there is fear of trend turning bearish.
-–Nifty 50 Dec ended at 17022.00, down 295.50 points; 36.20-point premium to spot index
-–Nifty 50 Jan ended at 17087.10, down 284.95 points; 101.90-point premium to spot index
-–Nifty 50 Feb ended at 17130.00, down 289.85 points; 144.80-point premium to spot index
The total turnover in the futures and options segment of the NSE was 50.8 trln rupees today, compared with 150.0 trln rupees on Thursday.
The turnover in index options was sharply lower at 47.2 trln rupees against 147.6 trln rupees the previous day as weekly options contracts expired on Thursday. The total premium turnover of index and stock options was at 311.1 bln rupees compared with 310.3 bln rupees on Thursday.
Infosys, Wipro, Reliance Industries, Indiabulls Housing Finance, ICICI Bank, Tata Consultancy Services, HDFC Bank, Zee Entertainment Enterprises, Bharti Airtel, Tata Power Co, Axis Bank, ITC and Bajaj Finance were some of the most actively traded underlying stocks. End
Edited by Shirsha Thakur
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Source: Cogencis
