Bears tighten grip as markets extend losses for fourth consecutive session; unwinding seen in 15,000 & 14,900 put options

Market Update at 3:45

Indian markets have extended their fall for the fourth straight session on Wednesday with Nifty and Sensex having registered losses of more than 1 per cent.  

Despite this sharp fall, the volatility index i.e., India VIX was almost flat. The broader indices underperformed the frontline indices as Nifty Mid-cap and Small-cap registered losses of over 2 per cent and as a result, the advance-decline ratio was substantially in favour of the decliners.   

All the sectors ended in red with Nifty PSU Bank and Nifty Realty leading the losers. In the afternoon session, we saw heavy open interest addition in the 15,000-call option in the current weekly options series. However, it has now shifted to 14,700 call option as more than 26 lakh open interest addition at this strike price. Meanwhile, unwinding was seen in 15,000 and 14,900 put options.    

Afternoon Market Update: The Indian benchmark indices trimmed their early morning gains and slipped into negative terrain as the market participants appeared nervous, owing to the rising COVID-19 cases in the country and also due to the US Federal Reserve’s Monetary Policy meeting, which is scheduled today. Consequently, Nifty slipped below the 14,900 mark and Sensex hovered around the 50,200 mark. The broader indices were seen underperforming the frontline gauges with Nifty Mid-cap and Small-cap inching lower by 1.04 per cent and 0.75 per cent, respectively.    

Amongst the sectoral indices, barring Nifty IT, which has eked out modest gains, all other sectoral indices were painted in red with Nifty Realty and Nifty Metal leading the losers. The metal sector, which was in the limelight in the recent past, has seen its major components moving below the crucial 20-DMA. Stocks such as Tata Steel, Hindalco, Jindal Steel, Hindustan Zinc, etc have slipped below their 20-DMA.   

In the Futures segment, there were 18 advancers and 124 declines with most of advances in the technology sector. The technology sector has seen maximum long built-up while the auto sector shows the maximum short built-up as it is the most-actively traded sector.   

Cues from options data: The 14,900 and 15,000 call options have seen maximum addition of open interest in today’s session with 14,900 call options adding about 23.55 lakh shares in the open interest and 15,000 call options adding nearly 17 lakh shares in the open interest. With this, the highest concentration of open interest stands at the 15,000-call option. Meanwhile, on the put side, 15,000 put options have seen unwinding of open interest of nearly 1.2 lakh shares, while the addition was seen in 14,900 and 14,800 put options. The 14,800 put options have seen the maximum open interest today as it has added more than 15 lakh shares in the open interest. This clearly indicates that Nifty would defend its support region of 14,715-14,800. While on the upside, the level of 15,000 would continue to act as a resistance level.   

Talking about stock-specific action, Shakti Pumps soared nearly 4.5 per cent on the bourses as the company informed that it has been awarded a contract from the Government of Uganda Ministry of Water & Environment for the supply of solar-powered water pumping systems at a contract price of USD 3,53,00,000.  

Another stock, which is in news, is Blue Star. The company informed that it aims to expand its market reach with the launch of a new affordable range of split ACs to cater to the mass market. 

Meanwhile, Aditya Birla Capital has provided in-principle approval to explore an initial public offering of Aditya Birla Sun Life AMC Limited, a material subsidiary of the company.