Informist, Wednesday, Dec 6, 2023
By Padmini Dhruvaraj
MUMBAI – Investors sold out-of-the-money call options of the Nifty 50 derivative contracts expiring on Thursday, indicating that the spot index will likely consolidate on the day of the expiry.
“Noticeable traction in key sectors is fuelling momentum in the index. However, we can’t ignore the possibility of some consolidation now,” said Ajit Mishra, senior vice president of technical research at Religare Broking.
The benchmark Nifty 50 opened higher today, extending gains for the seventh straight session, and touched an all-time high of 20961.95 points. The 50-stock index eventually ended 0.4% higher at 20937.70 points.
“Impressive winning streak continued for the 7th straight session as the street is now anticipating a strong popular mandate for the BJP (Bharatiya Janata Party) in the upcoming 2024 Lok Sabha polls. Also, falling crude oil prices and hopes that the US Federal Reserve will initiate rate cuts in the coming year boosted investors’ confidence,” said Prashanth Tapse, senior vice president of research at Mehta Equities.
However, writing was seen at strike prices of 21000 and above, indicating the Nifty 50 is unlikely to surpass the 21000 mark on Thursday. “Despite an encouraging market breadth, the price action remained lacklustre throughout the trading session, indicating potential signs of exhaustion in the bullish momentum,” said Avdhut Bagkar, technical and derivatives analyst at StoxBox.
The 20950 strike price of the call options had the highest net change in open interest, with 4.99 mln new positions. The premium on the contract rose 13.9% to 44 rupees. Moreover, some aggressive call selling was seen at 21400, 21500, and 21600 strike prices.
On the put side, premiums across strike prices fell. The 20900 strike had the highest open interest addition with 7.86 mln new positions. The premium on the contract, however, fell 67.6% to 33 rupees. Meanwhile, some aggressive put selling was seen at 19500, 20000, and 20500 strike prices.
The December futures contract of the Nifty 50 closed at a premium of 102.85 points to the spot index. Open interest in the contract rose 7.96% to 11.74 mln, according to provisional data.
Going forward, analysts see 20850 as a support for the Nifty 50 and major resistance at 21000.
–Nifty 50 Dec closed at 21040.55, up 97.95 points; 102.85-point premium to spot index
–Nifty 50 Jan closed at 21165.00, up 104.35 points; 227.30-point premium to spot index
–Nifty 50 Feb closed at 21269.55, up 106.10 points; 331.85-point premium to spot index
Reliance Industries, Adani Ports and Special Economic Zone, Tata Consultancy Services, Tata Power Co, Adani Enterprises, Hindustan Aeronautics, ITC, and Tata Motors were among the more actively traded underlying stocks. End
Edited by Ashish Shirke
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