F&O Morning Update for 4 January 2023

Asian Markets Update @ 7:00 am

The SGX Nifty fell -0.3% or 66 points from its previous close, suggesting a negative start for the Nifty50 today. Major Asian markets are trading mixed. Nikkei 225 in Japan fell 1.1%, while Hong Kong's Hang Seng index advanced 0.6%.

Global Markets Update

US stocks closed lower on Tuesday and started the first trading session of 2023 on a negative note with all too familiar volatile moves of 2022.  

Following declines in heavyweights Apple (-3%) and Tesla (-12%), the Nasdaq Composite dropped 0.7% to 10,386, while the Dow Jones closed flat at 33,136. The S&P 500 declined 0.4% and closed Tuesday's session at 3,824.

Index Action

Nifty50
January Futures: 18,315📈 ▲39 (+0.2%)
OI contracts: 2,19,455 (+2.6%)

After a negative start, the Nifty50 index consolidated in a narrow range of 300 points for the sixth-day in a row and closed the choppy session higher. Meanwhile, all sectors shifted between gains and losses in Tuesday’s trade. IT, Pharma and Banking gained between 0.5%-0.7% each, while Metal, Auto and FMCG declined between 0.4% to 0.5%, respectively.

Nifty50’s options contracts expiring on 5 January have sizable positions at 18,200 and 18,500 call options and 18,000 and 18,200 put options. 

As per options data and OI analysis, the broad range for the Nifty50 is between 17,500 and 18,600 levels. On the other hand, 18,000 and 18,400 are the critical levels to watch for the current week.

Bank Nifty
January Futures: 43,634 📈 ▲241 (+0.5%)
OI contracts: 91,746 (+4.7%)

The Bank Nifty index outperformed the broader market and closed the volatile session 0.5% higher. The banking index reclaimed the 43,300-mark for the first time after two weeks on a closing basis and traded above the psychologically crucial 43,000-mark throughout the session.

Among banking stocks, Axis Bank (+2.2%) and IndusInd Bank (+1.1%) were the top gainers, while AU Small Finance Bank (-0.9%) declined the most and ICICI Bank (-0.1%) closed flat.

Bank Nifty’s options contracts expiring on 5 January have sizable positions at 43,00 and 44,000 call options and 43,000 and 43,200 put options.

As per options data and OI analysis, the broad range for the Bank Nifty is between 42,500 and 44,400 levels. On the other hand, 43,000 and 43,700 are the critical levels to watch for the current week.

FII and DII Data**💰

The Foreign Institutional Investors (FIIs) sold shares worth ₹628 crore, while Domestic Institutional Investors (DIIs) purchased shares worth ₹350 crore in the cash market. In the derivatives market, FIIs sold index futures worth ₹666 crore and bought index options worth ₹9,964 crore. Further, they sold stock futures worth ₹154 crore and bought stock options worth ₹60 crore.

India VIX 

The India VIX, which measures the implied volatility of Nifty50 options, fell 2.0% to 14.39.

Stock Action📊

Long build-up was seen in Manappuram Finance, SBI Life, Astral, Power Finance Corporation and ICICI Lombard.

Short build-up was seen in Aditya Birla Capital, M&M Financial Services, SBI Cards, Sun TV and Britannia.

*In Futures and Options or F&O, long build-up means an increase in Open Interest (OI) along with an increase in price, and short build-up means an increase in Open Interest (OI) along with a decrease in price.

**Source: nseindia.com. Cash market figures are provisional.