The benchmark gauge of Indian equity options gained for the first time in three days as stocks fell amid speculation the U.S. Federal Reserve will raise interest rates next month.
The India VIX index added 2.8 percent to 16.46 at the close in Mumbai, after rising the previous two weeks. The CNX Nifty index lost 0.5 percent to 8,477.30. Global investors bought $102 million of index options on Friday, capping an 11th day of purchases, the longest stretch since a 19-day period through July 10, according to data compiled by Bloomberg.
The decline in stocks comes amid speculation that the U.S. may increase interest rates next month. The Indian parliament ended a session on Thursday without being able to pass a key tax bill, in a setback to the government’s aim of introducing the levy in April 2016. Foreigners have sold $143 million of local stocks this month through Thursday.
“Overseas investors are turning cautious,” Ravi Sharma, derivatives analyst with Prabhudas Lilladher Pvt. in Mumbai, said in a phone interview. “Nifty has support around 8,450 and resistance around 8,600.”
Sharma recommends selling Nifty calls with exercise prices of 8,600 and 8,700, and selling 8,400 puts, on expectations the Nifty will move in a range.
Nifty 8,200 put options and 8,600 calls had the highest number of outstanding contracts.