The CNX Bank Nifty Index's skew spread, a measure of how expensive puts, or bearish bets, are relative to calls, was at minus 4.07, the lowest reading since November 2 when the gap was minus 5.92, data compiled by Bloomberg show. The bank gauge comprises 12 lenders including State Bank of India, the largest by assets.
The Reserve Bank of India may pare its benchmark rate by 25 basis points at a May 3 policy review, according to 14 of 16 economists in a Bloomberg survey. The bank index has jumped 14 per cent in April, poised for the biggest monthly advance since September, amid speculation a cut in borrowing costs would help lenders boost lending and profitability. "Investors are bullish on banks even after the runaway rally," Aditya Agarwal, a derivatives analyst at Way2Wealth Securities, said today. "Improving fundamentals and expectation of a 50-basis point rate cut is lending support to the bank index."
The ratio of outstanding puts to sell the CNX Bank index versus calls to buy was at 1.62 at 12:44 pm, higher than its 12-month average of 0.93, the data show. April call options with a strike price of Rs 13,000 and put options with a Rs 12,500 strike have the largest ownership among bullish and bearish contracts, data compiled by Bloomberg show. Puts give the right to sell a security for a certain amount, called the strike price, by a given date. Calls convey the right to buy. The CNX Bank Nifty rose 1.4 per cent to 12,722 today, headed for highest close since January 30.