Bulls beat back bears on last derivatives expiry day of the year
Mumbai: A smart rally in bank stocks in the last hour of trade lifted the markets from early losses on Thursday, driving the Nifty and the Sensex to closing gains on the last derivatives expiry of 2022. Expiry, which happens on the last Thursday of every month, results in settlement of derivatives contracts like futures and options.
Domestic institutions closely matched selling by their foreign counterparts, purchasing a provisional ₹515.83 crore worth of shares against sales by the latter of a provisional ₹572.78 crore. Retail buying helped the indices end in the green after languishing in losses for much of the day.
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The Nifty swung almost 200 points between the day’s low of 17,992.8 and the closing of 18,191, up 68.5 points from the previous close. State Bank of India and IndusInd Bank led the charge, rising 1.4% and 1.8% each.
The Sensex also gained an impressive 655 points from an intraday low to close up two-fifths of a percent at 61,133.88, led by gains in banking heavyweights including Axis Bank, ICICI Bank and IndusInd Bank.
Analysts attributed the rise to the resilience of the bulls after an over-1,000-point fall in Nifty from a record high of 18,887.6 at the beginning of the month to 17,774.25 on Monday.
“Whenever you see a 1,000-point type of fall, value buying at lower levels supports the markets and bulls get back their mojo,” said Amit Gupta, fund manager, ICICI Securities PMS. “We saw this happening when the market tanked to 16,000 from 17,000.”
Gupta expects the market to consolidate for some time as it has given a breakout above 18,000 before heading for the 2023 target of 21,000, driven by corporate-linked banks, capital goods, telecom and chemicals.
ICICI Direct pegs the range between 17,000 and 21,000 next year, with India continuing to outperform advanced and emerging markets on buoyant tax revenues, falling crude and rising GDP growth.
“On expiry, put option sellers, who are bulls, tend to protect the levels at which they have written puts, and we saw this happen on Thursday along with good support from banks,” said Chandan Taparia, VP (research), Motilal Oswal Financial Services (MOFSL).
MOFSL expects credit growth and capex themes to play out in CY23, with sectors like BFSI, capital goods, infra, cement, housing, defence and railways being dominant.
In 2022 through December 2022, Nifty rose 4%, outperforming benchmark indices of brazil (-3%), UK (-1%), France (-9%) and China (-18%), to name a few.
FIIs sold shares worth ₹1.22 trillion in the calendar year so far, but DII buying of over ₹2.6 trillion enabled the Nifty to recover from a low of 15183.4 on 17 June through a life high of 18887.6 on 1 December.
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