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Equity Futures: F&O data suggests Cummins India to bleed more

Informist, Friday, Oct 1, 2021


By Ankika Biswas


MUMBAI – The sharp fall in shares of Cummins India in the spot market following the power ministry mandating consumers to switch to cleaner technology within five years to reduce pollution levels, triggered strong bearish bets in the stock’s derivatives segment today. 


The over 46% surge in open interest of the October futures contract suggested the strong addition of short positions on fears of further correction in the stock. Additionally, traders heavily bought the out-of-the-money put options of 880 and 900 rupees, expecting the stock to fall further. The premiums on these contracts more than doubled.


Analysts recommended investors to avoid the stock as of now as the correction is expected to run deeper to 870-880 rupees. However, they feel that some buying interest may emerge at these key support levels and help the scrip regain some lost ground. 


The stock had tanked over 11% during the day following the development, but managed to close off the day’s low at 918.10 rupees, down 7.4%.


Similarly, the emergence of buying interest at lower levels helped the Nifty 50 to close today’s session off the day’s low, which analysts termed as a positive for the market. However, citing the unfavourable ‘risk-reward ratio’ after the sharp gains in the index for two straight monthly derivative series, analysts recommended investors adopt a stock-specific approach.


Today, the 50-stock index closed 0.5% lower at 17532.05 points, down for the fourth straight session. It had fallen over 0.9% during the day, testing an intraday low of 17452.90 points.


The 5% rise in the open interest of the October futures contract suggested the build up of short positions as investors feared a further correction in the index. On the options front, selling was seen across out-of-the-money call options of 17600, 17700 and 17800 strike prices, which resulted in a 47-68% fall in premiums on these contracts.    


-–Nifty 50 Oct ended at 17525.75, down 97.40 points; 6.3-point discount to spot index

-–Nifty 50 Nov ended at 17561, down 95.85 points; 28.95-point premium to spot index

-–Nifty 50 Dec ended at 17599.30, down 188.80 points; 67.25-point premium to spot index


Total turnover in the futures and options segment of the NSE was 33.6 trln rupees today, much lower than 128 trln rupees on Thursday.  


The turnover in index options was 30.8 trln rupees compared with 123.5 trln rupees in the previous session. The total premium turnover of index and stock options was 245.80 bln rupees compared with 306.00 bln rupees on Thursday. 


Tata Steel, Tata Power, Reliance Industries, Tata Motors, Bharti Airtel, Infosys, HDFC Bank, Adani Enterprises, State Bank of India and Jindal Steel were the other most actively traded stocks today.  End


Edited by Michael Correya


Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.


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Source: Cogencis

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