Informist, Wednesday, Feb 9, 2022
By Joe Milton
MUMBAI – Traders covered short positions in the Nifty 50 index futures ahead of the Reserve Bank of India’s policy meeting outcome on Thursday, which helped the index close above 17400 points today. Moreover, options data suggest more gains on the cards for the index in case of favourable statements from the central bank.
The Street expects the RBI to continue with its liquidity normalisation measures and hike the reverse repo rate by 15-40 basis points. Apart from this, the RBI’s comments on inflation, economic growth, and fiscal deficit will be closely watched in the context of the recently presented Union Budget 2022.
In case the RBI refrains from following the hawkish footsteps of central banks of other major countries, it may increase the risk appetite of investors leading to more gains in Nifty 50.
In anticipation of this upmove in the benchmark index, and as weekly options expire on Thursday, Nifty 50 call option sellers closed their positions across 17400-17600 strike price.
The open interest in 17500 strike price of Nifty 50 call option fell to 5.7 mln from over 7 mln on Tuesday.
Today, the 50-stock index closed 1.1% higher at 17463.80 points, slightly off the day’s high of 17477.15 points.
If the Nifty 50 stays above 17500 points, it may trigger more covering of short positions, which will push the index up to 17700 points, said Ratnesh Goyal, senior technical and derivative analyst at Arihant Capital Markets.
On the downside, analysts expect the Nifty 50 to find support immediately at around 17400 points as the highest open interest in the put options expiring on Thursday was at this level.
The Nifty Bank index also witnessed covering of short positions today, which pushed the index higher and close at 38610.25 points, up 1.5%. Open interest in the February futures of the index was down 4.5% at 1.9 mln.
In the call options segment of the Nifty Bank index expiring on Thursday, the highest open interest was at 39000 strike price, and analysts expect the next decisive upmove for the index if it stays above this level.
On the stock-specific front, Coal India gained 5.4% and closed at 168.60 points as investors accumulated the stock as the board plans to mull distribution of the second interim dividend for the current financial year in the meeting scheduled on Monday.
Today, the stock witnessed a breakout with strong volumes, and traders added long positions in the February futures of the stock. Open interest in the futures contract surged 17% to 43.9 mln.
In the options segment of Coal India, traders shifted to higher strike prices, and analysts expect the stock to touch 185 rupees in the near term.
–Nifty 50 Feb ended at 17486.50, up 213.50 points; 22.70-point premium to spot index
–Nifty 50 Mar ended at 17545.00, up 210.50 points; 81.20-point premium to spot index
–Nifty 50 Apr ended at 17601.00, up 212.30 points; 137.20-point premium to spot index
The total turnover in the futures and options segment of the National Stock Exchange was 86.6 trln rupees compares to 99.4 trln rupees on Tuesday.
The turnover in index options was at 83.7 trln rupees against 96.1 trln rupees the previous day. The total premium turnover of index and stock options was 314.2 bln rupees compared to 473.4 bln rupees on Tuesday.
The most actively traded underlying stocks were Maruti Suzuki India, Reliance Industries, Housing Development Finance Corp, Vedanta, Tata Power, Tata Motors, HDFC Bank, Bharti Airtel, and Tata Steel. End
Edited by Michael Correya
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Source: Cogencis
