The benchmark gauge of India’s option costs climbed for a fifth day on increased demand for protection as investors awaited earnings from some of the nation’s largest companies.
The India VIX Index advanced 2.6 percent to 15.52 at the close in Mumbai, capping its longest rising streak in three months. The 50-stock CNX Nifty index fell 0.5 percent to 8,589.80 from a three-month high.
Reliance Industries Ltd., owner of the world’s biggest refining complex and state-owned gas distributor GAIL India Ltd. are among Nifty companies set to report quarterly results by Friday. The rise in option costs signals caution after the Nifty rose 3.2 percent this month through Wednesday and Indian company earnings fell for two straight quarters through March.
“Traders are raising hedges after a sharp rally in the Nifty,” Sanjiv Bhasin, executive vice president at India Infoline Ltd., said in a phone interview from New Delhi. “Nifty faces resistance at 8,650 and is likely to top out tomorrow after Reliance results.”
The number of outstanding Nifty options climbed to 5.54 million contracts from 5.41 million at Wednesday’s close, data compiled by Bloomberg show. Put options with a strike price of 8,500, and 8,700 calls, had the highest open interest.
Nifty July futures fell 0.5 percent to 8,604.30.