India Nifty Futures Open Interest Rises as Stocks Set for Record

Open interest in CNX Nifty index futures climbed to the highest level in a year as record-high share prices spurred investors to hedge their holdings, according to Kotak Securities Ltd.

Open interest, or the number of outstanding contracts, in Nifty futures for November through January was at 462,243 contracts as of 4:02 p.m. in Mumbai. That’s the highest level on the opening day of a new series since Nov. 1, 2013. October derivatives expired yesterday with record trading volumes.

The 50-stock Nifty climbed 1.9 percent to an all-time high, capping the sixth straight month of advances. The gauge has risen 32 percent this year, the best performer among the world’s 10 largest equity markets. It is valued at 15.5 times projected 12-month earnings, compared with 11 times for the MSCI Emerging Markets Index.

“Investors are raising their hedges after the index surged to a record, pushing open interest higher,” Sahaj Agrawal, vice president of derivatives at Kotak Securities, said in a phone interview from Ahmedabad. “We expect volatility to rise.”

Traders held 13 bearish contracts on the index for every 10 bullish wagers, the highest put-to-call open interest ratio since March, data compiled by Bloomberg show. The India VIX index, a measure of protection against stock market swings using options, added 0.2 percent to 13.29.

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