Nifty futures’ combined open interest hits seven-year high ahead of Budget, RBI MPC meet | Stock Market News
Source: Live Mint
Mumbai: Anticipating a significant movement in stocks in response to key upcoming events – the Union Budget for FY26 on Saturday and the RBI policy meeting outcome on 7 January, market participants raised aggregate positions in Nifty futures contracts to a seven-year high on Thursday, according to provisional exchange data.
Nifty combined futures open interest—open buy or sell positions—hit a provisional 23.94 million shares on Thursday, which also marked the expiry of monthly derivatives contracts.
“These combined positions were the highest since 39.19 million shares on 23 January 2018,” said Jay Vora, research analyst at analytics firm IndiaCharts.
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Nifty futures influence the Nifty spot index movements and vice versa. When participants’ outstanding positions rise ahead of important events, it signals that they are expecting a big move.
“The provisional data indicates that investors and traders expect a significant move up or down post the Budget and the following week which coincides with the MPC monetary policy where a rate cut is being priced in,” said Rajesh Palviya, senior vice-president (technicals & derivatives), Axis Securities.
Indeed, the 6 February option expiry at the 23300 level of Nifty signalled the index would move in a 5.3% range from 22680 to 23920 . This is based on the provisional closing price of the 23300 call and put, which totalled around ₹620 a share (75 shares to a contract) on Thursday evening.
“As we held the 22800 support , I expect the market could test the 24000 level post the budget, and ahead the MPC policy meet between 5 and 7 February,” said Chandan Taparia , derivatives and technical research head at Motilal Oswal Financial Services.
Amid a sustained FPI sell-off and depreciating rupee, market analysts expect finance minister Nirmala Sitharaman to announce measures that would address household consumption slowdown through income tax relief, while staying on the fiscal glide path.
Market veteran Nilesh Shah, MD of Kotak Mahindra AMC, said non-tax revenues like “divestment” step up and an improvised gold monetisation scheme to harness the dead Asset could be under consideration while keeping the fiscal deficit target of 4.5% for FY26.
The Reserve Bank of India (RBI) has taken a number of measures to address the liquidity deficit in the financial system through open market operations and dollar-rupee swaps.
