Informist, Thursday, Nov 25, 2021
By Ankika Biswas
MUMBAI – The alarm bells of higher valuations of domestic equities have finally rung, putting a halt to the gaining streak in the benchmark Nifty 50 in the November derivative series. Rising COVID-19 cases in Europe, higher US bond yields and commodity prices made way for the bears to conquer the market, resulting in a nearly 2% fall in Nifty 50 during the November series.
The 50-stock index had gained during three consecutive series before November.
Terming it as a ‘healthy and much-due’ correction, Ashis Biswas, the head of technical research at CapitalVia Global Research believes that the Nifty 50’s corrective phase will continue at least till the end of December.
While the rollover of positions to the December series might have picked up today, the below-average data on Wednesday indicated the prevailing caution in the market amid persisting concern over higher bond yields, spread of COVID-19 in Europe, and higher crude oil prices, which may put a lid on gains in the near term.
The prevailing caution was also evident from the straddle positions initiated by traders at the 17500-call and -put options of the Nifty 50, expiring on Dec 30. A straddle strategy involves purchase of put and call options of the same strike price and expiration date, when traders are unsure of the direction a stock or an index may take.
Today, the Nifty 50 closed 0.7% higher at 17536.25 points.
After briefly slipping below the 17400-point mark and testing an intra-day low of 17351.70 points, the fantastic recovery in the headline index was supported by sharp gains in the shares of index-heavy Reliance Industries.
Plans to hive off its gasification business to unlock value of synthesis gas prompted traders to heavily buy RIL’s out-of-the-money call options of 2,540-, 2,560- and 2,600-rupee strike prices, expiring on Dec 30, resulting in a more-than-doubling of their premiums.
The stock closed over 6% higher at 2,492.95 rupees.
As for the frontline sector, rollovers in Nifty Bank to the December series was significantly lower than the three-month average, with most of them being short positions. Significant open interest at the 37500 call and 36500 put options indicated that the consolidation in the banking stocks would continue in the December series before any directional move kicks in, said ICICIdirect in a report.
The sectoral index closed 0.2% lower at 37364.75 points.
Meanwhile, higher rollovers were seen in sectors such as automobiles, infrastructure, and pharmaceuticals.
-–Nifty 50 Dec ended at 17602, up 154.55 points; 65.75-point discount to spot index
-–Nifty 50 Jan ended at 17670.55, up 152.65 points; 134.30-point premium to spot index
The total turnover in the futures and options segment of the NSE was 135.04 trln rupees today compared with 79.1 trln rupees on Wednesday.
The turnover in index options was 130.91 trln rupees compared to 74.6 trln rupees in the previous session. The total premium turnover of index and stock options was 295.48 bln rupees compared to 271.8 bln rupees on Wednesday.
Reliance Industries, ICICI Bank, State Bank of India, Bharti Airtel, Tata Steel, ITC, Infosys and HDFC Bank were some of the most actively traded underlying stocks. End
Edited by Mainak Moitra
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Source: Cogencis
