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Equity Futures:More losses on cards for large, mid-caps as bears rage

Informist, Thursday, Oct 21, 2021

 

By Ankika Biswas

 

MUMBAI– Largely disappointing corporate earnings continued to keep bears raging in today’s trade, somewhat denting the short-term outlook for the market. Not only the large-caps, but even small-cap stocks witnessed strong bearish bets in the derivatives segment.

 

Investors sold the October futures contract of Havells India, as indicated by the over-9% rise in its open interest, following the stock’s sharp fall in the spot market today. It had fallen 14% intraday to a one-month low of 1,210.30 rupees as a contraction in the company’s margin due to high raw material costs offset strong revenue growth in the September quarter. 

 

Traders sold the out-of-the-money call options of the 1,300-, 1,340- and 1,360-rupee strike prices, leading to a 78-84% fall in their premiums. 

 

While the stock had fallen only 4% in the past three sessions, the sharp decline in today’s trade indicates a sudden change in sentiment. This suggests that it may have entered a corrective phase.

 

With the overall sentiment being negative, the scrip is expected to fall further to 1,180 rupees if it fails to breach its key resistance of 1,380 rupees, said Amit Trivedi, a technical and derivatives analyst at Yes Securities. He advised investors to avoid trading in the stock due to high volatility.

 

Today, the scrip closed nearly 9% lower at 1,285.80 rupees.

 

Similarly, investors sold the October futures contract of Asian Paints due to fears of further correction as indicated by the near-10% uptick in its open interest. This comes after the stock’s sharp fall in the spot market following a staggering erosion in its operating margin in Jul-Sep amid high raw material prices.

 

Consequently, traders sold the out-of-the-money call options of the 3,100-, 3,150- and 3,200-rupee strike prices, resulting in a 73-79% fall in their premiums.

 

Given that the stock has fallen for the fifth session today, Trivedi expects some minor recovery to kick in. However, as long as the stock remains below its key resistance of 3,200 rupees, it is likely to fall further to 2,750 rupees, he added.

 

Today, the scrip closed over 5% lower at 3,002 rupees.

 

As for the headline Nifty 50, the index fell for the third straight session and even briefly slipped below the 18100-point mark during the day. However, some buying at lower levels in the final hour saw it close sharply off the day’s low of 18048 points. This kind of activity led analysts to believe that the index is likely to move in a range of 18000-18400 points going forward.

 

Today, the index closed 0.5% lower at 18178.10 points.

 

Traders sold the out-of-the-money call options of 18200, 18400 and 18500 strike prices expiring on Oct 28, resulting in a 31-45% fall in their premiums.

 

While strong call writing prevailed in today’s session, activity in the futures segment continued to be muted. The open interest of the October futures contract of the index was down 3%.

 

-–Nifty 50 Oct ended at 18240.50, down 76.20 points; 62.4-point premium to spot index

-–Nifty 50 Nov ended at 18290.10, down 72.30 points; 112-point premium to spot index

-–Nifty 50 Dec ended at 18373, down 68.60 points; 194.90-point premium to spot index

 

Total turnover in the futures and options segment of the NSE was higher at 147.85 trln rupees today versus 75 trln rupees on Wednesday.   

 

The turnover in index options was at 142.86 trln rupees, higher than 70 trln rupees in the previous session. The total premium turnover of index and stock options was 352.43 bln rupees compared with 327.5 bln rupees on Wednesday.

 

Adani Ports and Special Economic Zone, Tata Motors, Reliance Industries, Asian Paints, Kotak Mahindra Bank, Tata Steel, Infosys and State Bank of India were the other most actively traded underlyings today.  End

 

 

Edited by Snigdha Kuttikat

 

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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© Informist Media Pvt. Ltd. 2021. All rights reserved.

Source: Cogencis

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