Mumbai, July 29 — Market analysts expect the Nifty 50 to break its expiry jinx and close above the 24,000 mark in August after five straight monthly settlements below that level, helped by easing tensions in West Asia that could revive foreign investor inflows.
The bellwether index settled at 25,424.65 at the February expiry, but has since consistently ended below the 24,000 level-between 22,331.4 and 23,985.35-despite exceeding it intra-month. Nifty derivatives expire on the last Tuesday of every month, with weekly expiry every Tuesday.
In the most recent expiry, the Nifty hit a high of 24,530.9 on 7 July but settled at 23,985.35 this Tuesday amid geopolitical uncertainty. Similarly, it hit a high of 24,261.6 during the previous monthly expiry, but settled at 23,865.75 on 30 June.
At expiry, the derivatives and spot Nifty prices converge as the premium for holding a futures position becomes zero.
“There tended to be heavy writing (selling) at the 24,000 call all these months, which is why it became a tough hurdle,” said Amit Golia, managing director (MD) and chief executive officer (CEO), Shriram Financial Services Pvt. Ltd.
Golia added that there were indications of a climb-down of the “escalatory ladder” by both sides after the 17 June ceasefire fell apart earlier this month.
“If tensions abate and crude cools off as it did more recently, you might see a further short covering recovery on renewed FPI (foreign portfolio investment) flows, and if that happens, we could settle above the 24,000 level in the current expiry (25 August),” Golia said.
The two sides signed a 60-day interim ceasefire on 17 June, but it came apart earlier this month over differences on control of shipping through the Strait of Hormuz, through which a fifth of global oil supply transits annually.
Brent crude, which surged 66% from February to as much as $120.34 a barrel on 30 March, cooled to $79 a barrel on 17 June amid rising ceasefire hopes.
However, it again surged 21% since then to $95 a barrel on 23 July after fighting resumed earlier this month. However, a pause in fighting since then, amid the possibility of renewed talks, caused crude to retreat to $84 as of Wednesday.
Analysts remain cautiously optimistic, given the resumption of talks by both sides.
“I expect a range of 23,300-24,700 for the current expiry,” said Sahaj Agrawal, senior vice president (research) at Kotak Securities. “However, any potential rise will be slow and gradual. Value opportunities should be focused, whereas traders are advised to maintain trailing levels for positions.”
“FPIs are currently in a wait-and-watch mode in the short term, but they cannot avoid India, whose structural long-term growth story remains intact,” said Sundeep Sikka, MD & CEO, Nippon Life India Asset Management, adding that Japanese investors he met were bullish on India from a long-term perspective.
Indeed, FPI cash market selling intensity has declined so far this month, with net sales of Rs.2,126 crore, down from Rs.53,958 crore last month.
Since March, coinciding with the war, FPIs have net sold shares worth Rs.2.77 trillion, against mutual fund-led domestic institutional investor buying of Rs.3.96 trillion. Published by HT Digital Content Services with permission from MINT. For any query with respect to this article or any other content requirement, please contact Editor at contentservices@htdigital.in
