BackIndia put option hedges reach 1-year high with stocks at record
India VIX Index rose 3.1% to 17.80, set for the highest level since 7 January
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Mumbai: Options traders are buying the most protection against losses in 14 months as Indian stocks rallied to a record for a second straight day.
The ratio of outstanding CNX Nifty index puts to calls rose to 1.43 at 11:22am in Mumbai, the highest since 31 October 2013, according to data compiled by Bloomberg. The 50-stock Nifty gained 0.1% to an all-time high of 8,703.05, poised for a fifth day of gains. The India VIX Index rose 3.1% to 17.80, set for the highest level since 7 January.
“We are advising clients to book some profits after the sharp rally," Rajendra Wadher, director at PRB Securities, said by phone from Mumbai on Wednesday.
The equities rally comes after last week’s unscheduled interest rate cut by the Reserve Bank of India, and before the federal budget expected next month. Central Bank governor Raghuram Rajan has said continuing disinflationary pressures and sustained fiscal consolidation by the government would be critical for further easing of monetary policy. The RBI’s next policy meeting is on 3 February.
The benchmark 30-stock Sensex index, which climbed 0.2%, is this month’s best performer in US dollar terms among 93 global indexes tracked by Bloomberg.
Overseas investors purchased $67.6 million of stocks on 19 January, taking this year’s inflows to $223.3 million. Foreigners bought a net $162.2 million of Nifty options on Tuesday, according to data compiled by Bloomberg.
The Nifty is valued at 16 times its projected 12-month results, compared with 10.8 times for the MSCI Emerging Markets Index. Bloomberg
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