Nifty to Hit New High by Tuesday, Expect Options Traders

#Options #traders #expect #Nifty #hit #high #Tuesday

The Indian stock market is abuzz with excitement as the Nifty 50 index, the benchmark of the National Stock Exchange (NSE), is on the cusp of reaching a new high. As of Thursday, the index was trading at 26,143, just 0.5% below its record high of 26,277.35, achieved on September 27, 2024. With options traders initiating trades that anticipate a new high of 26,358 by Tuesday, November 25, the market is filled with anticipation and optimism.

Understanding the Options Market

To grasp the significance of this development, it’s essential to understand the options market. Options trading involves buying and selling contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (strike price) before a certain date (expiration date). In this case, options traders have been selling a combination of Nifty call and put options at the 26,100 strike for a combined ₹258 a share. This trade indicates that sellers expect the Nifty to stay within the range of 25,842-26,358 by Tuesday, allowing them to pocket the entire ₹258. If the index breaks either end of this range, they will incur losses.

Insights from Experts

According to Kruti Shah, a quant analyst at Equirus Capital, an investment bank, “Based on the options data, a new high for Nifty is around the corner.” This sentiment is echoed by Rohit Srivastava, founder of IndiaCharts Data Analytics, a Sebi-registered research analyst, who expects the Nifty to hit a new high over the next few sessions. Srivastava notes that options sellers are typically better informed and have deeper pockets than options buyers, which is why they are selling more puts than calls.

Open Interest: A Key Indicator

Open interest refers to traders’ cumulative open buy-sell positions. A relative increase in put open interest over call open interest is a bullish indicator, while an increase in call open interest over put open interest implies bearish sentiment from a seller’s point of view. Currently, traders are selling more puts than calls, indicating a bullish outlook. The 26,100 call expiring on November 25 saw open interest increase by 72,409 contracts to 148,783 contracts, while the 26,100 put contract saw open interest surge by 119,510 contracts to 159,789 contracts by noon on Thursday.

Retail Investors: A Different Story

While the benchmark indices are nearing record highs, many retail investors’ portfolios are still in losses. According to Shah, “At the portfolio level, retail investors have been bleeding for the past 15-18 months, which shows a disconnect between the benchmarks and their constituents.” This underperformance is expected to end in the next two to three months if the Nifty surges to fresh highs, enabling mid and small cap counters to gain momentum and allowing folios to at least break even by January or February.

Broader Market Underperformance

Despite the Nifty 50 approaching a record high, the broader market, as represented by the Nifty 500, has been underperforming. Data from IndiaCharts shows that the number of Nifty 500 stocks at fresh 52-week highs on a rolling nine-day average stood at just 18 on Wednesday, compared to 40 stocks at 52-week highs when the Nifty 500 hit a record high of 24,496.9 on September 26, 2024. The Nifty 500 was trading at 23,978 around noon on Thursday, 1.3% from its all-time high last year.

Nifty 50: A Rollercoaster Ride

The Nifty 50 has had a wild ride over the past year. It plunged 17% from its lifetime high in September 2024 to a low of 21,743.65 on April 7, 2025. As of noon on Thursday, it was up 20% from its April low at 26,143. This volatility has made it challenging for retail investors to navigate the market, resulting in underperformance.

Key Takeaways

• Options traders expect the Nifty to hit a new high of 26,358 by Tuesday, November 25.
• The options market indicates a bullish outlook, with traders selling more puts than calls.
• Retail investors’ portfolios are still in losses, despite the benchmark indices nearing record highs.
• The broader market, as represented by the Nifty 500, has been underperforming.
• The Nifty 50 has had a volatile ride over the past year, making it challenging for retail investors to navigate the market.

Conclusion

As the Nifty 50 approaches a new high, options traders and experts are optimistic about the market’s potential. While retail investors have faced challenges, the expected surge in the Nifty could lead to momentum building up in mid and small cap counters, enabling folios to break even. As the market continues to evolve, it’s essential for investors to stay informed and adapt to the changing landscape. Whether you’re a seasoned investor or just starting out, one thing is clear: the Indian stock market is full of opportunities and surprises. So, stay tuned and keep a close eye on the market, as the next few sessions are likely to be exciting and unpredictable. Share your thoughts and predictions in the comments below, and let’s navigate the market together!