Options data signal market in bull zone in July amid tax-sop optimism in budget

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₹750,000 on income under the new tax regime, which is adding to the bullish sentiment," said A. Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC .

"Aside from buying by mutual funds, foreign investors have also turned net buyers in June, after two straight months of selling ahead of the budget."While domestic institutional investors (DIIs) have net invested ₹1.22 trillion in the past three months, as per BSE data, their foreign counterparts (FIIs) turned net buyers of ₹18,807 crore this month after net selling ₹34,257 crore in the preceding two months, according to depository data.One of the drivers of the momentum, which hint at a strong rollover of bullish derivatives positions, is reflected in the rising number of put options being sold than call options on a market-wide basis in the past two days through Wednesday.When traders sell more puts than calls, they believe that chances of a market correction are less and thus they can pocket the premium being paid by the put buyers.This, in turn, was reflected in the value of index and stock put options exceeding the value of index and stock call options by ₹1.58 trillion on Tuesday and ₹51,523 crore on Wednesday. Until then, the whole of this month witnessed value of market-wide calls being higher than market-wide puts, according to Rohit Srivastava, founder, IndiaCharts.

Exchange data for Thursday, which coincides with the monthly expiry of derivatives, was still awaited.When more calls relative to puts are sold there is doubt about sustenance of an uptrend. Traders sell more calls relative to puts as they don't expect the market to rise and can thus pocket the premium."That premise has changed over the past two days through Wednesday and my expectation is that the