Indian equities gained the most in a week on Thursday as traders took solace in the fact that the tone of the central bank officials of the world's largest economy was not as hawkish as anticipated.
The Nifty 50 Index gained over 1 percent to close above 8,273. The rally was partly a result of fresh long positions taken in the index's futures, which saw an open interest addition of over 7 percent. The Nifty Bank Index, which had been witnessing a build-up in short positions over the previous few days, also saw covering of positions as the index advanced by over 1.1 percent.
The Nifty Bank's January futures open interest declined by 10.3 percent on Thursday. Foreign institutional investors bought index futures worth Rs 1,674 crores on a net basis.
The India Volatility Index retreated 5.3 percent to close at 15, indicating considerable contraction in put option premiums. While maximum open interest in puts remained with the 8,000 strike price, it shifted the 8,400 call from the 8,200 call hence broadening the near-term range for the Nifty.
In a reversal of trend observed in the previous few days, FIIs bought 42,392 index call contracts and unwound positions in 25,420 index put contracts on net basis.
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