Indian Option Costs Drop Most in Six Weeks Amid Rate SpeculationSantanu Chakraborty
India’s benchmark gauge of demand for equity options fell the most in six weeks as speculation grew the central bank will lower interest rates.
The India VIX index sank 5.9 percent to 16.02 at the close in Mumbai, a second day of losses. The CNX Nifty index jumped 2 percent to 8,518.55, rising the most since Jan. 15.
Wholesale prices in India dropped by a more-than-estimated 4.05 percent in July, the steepest fall in data going back to 2005, commerce ministry figures showed on Friday. July consumer prices also rose less than expected, prompting calls from the government to lower rates, among the highest in Asia. Reserve Bank of India Raghuram Rajan kept borrowing costs at a review earlier on Aug. 4.
“The rate-cut murmur is gaining ground amid slowing inflation,” Pulakit Parekh, a trader at Mumbai-based brokerage Mehta Vakil, said in a phone interview. “Nifty is rebounding from highly oversold territory.”
Nifty put options with an exercise price of 8,200, and 8,600 calls, were the most popular by number of outstanding contracts, according to data available as of 3:51 p.m.
Global investors bought $146 million of index options on Thursday, a 10th day of net purchases, according to data compiled by Bloomberg.
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