Informist, Friday, Apr 1, 2022
By Vaibhavi and Abhishek Saini
MUMBAI – The Nifty 50 surpassed 17700 points for the first time in nearly two months today, which prompted traders to place bullish bets in the derivatives segment on hope of further gains in the coming sessions.
The upward trajectory in the Nifty 50 today fuelled optimism among investors as they shifted their bets to higher strike prices among put options, and also bought higher strike price call options, resulting in a sharp fall in fear gauge India VIX, which also improved sentiment.
India VIX fell around 12% to a near two-month low of 18.12 points.
Premiums for the 17800 and 18000 strike price call options of the Nifty 50 jumped 28% and 49%, respectively, in anticipation of the index testing these levels next week.
The positive momentum for the index is likely to take it towards 17800 points, which will act as an immediate resistance, said Miraj Vora, senior manager at IDBI Capital Markets.
While profit booking cannot be ruled out, Vora said even in case of a pullback, the index could be seen drawing support at the 17400-17300 point zone.
Today, the Nifty 50 ended at 17670.45 points, with 1.2% gains, after touching a high of 17703.70 points during the day.
Among specific stocks, Hero MotoCop and NTPC witnessed strong action in the derivatives segment today. Shares of Hero MotoCorp slumped 6% today, as the income tax department alleged that the company had siphoned off money. The negative sentiment around the stock led traders to place bearish bets in the derivatives segment.
A surge of nearly 16% in open interest in the April futures contract of the stock indicated build-up of short positions, and hinted at a further correction in the stock.
As per options data, analysts expect strong support for the stock at 2,140-2,150 rupees, as the stock rebounded from those levels for the second time in four sessions.
Out-of-the-money call options of the 2,300-rupee strike price witnessed the highest addition of open interest and will act as a key resistance level.
Shares of Hero MotoCorp recouped some of the day’s losses and ended 2.4% lower at 2,240.15 rupees.
On the flipside, shares of NTPC rose over 6% after the company reported its highest-ever power generation for 2021-22 (Apr-Mar). Following the improved outlook, traders anticipate further gains for the stock as open interest in its April futures contract jumped over 9%.
Premiums across 145-155-rupee call options jumped 33-96% indicating the upside for the stock will continue in the near term. Further, writing at the 140-rupee strike price put option indicated the formation of a support base at that level.
Today, the stock ended 5.9% higher at 142.95 rupees.
–Nifty 50 Apr ended at 17737.95, up 193.50 points; 67.50-point discount to spot index
–Nifty 50 May ended at 17765.00, up 193.95 points; 94.55-point premium to spot index
–Nifty 50 Jun ended at 17800.00, up 149.65 points; 129.55-point premium to spot index
The total turnover in the futures and options segment of the NSE was 41.49 trln rupees, significantly lower than 156.55 trln rupees on Thursday.
The turnover in index options was 38.71 trln rupees, lower than 152.84 trln rupees in the previous session. The total premium turnover of the index and stock options was 290.93 bln rupees, compared with 347.51 bln rupees on Thursday.
The most actively traded underlying stocks were ICICI Bank, Tata Motors, HDFC Bank, Tata Power, State Bank of India, Reliance Industries, Axis Bank, Infosys, Adani Ports and Special Economic Zone and Tata Steel. End
Edited by Avishek Dutta
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Source: Cogencis
