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Equity Futures: Long bets in Kotak Bank on strong Jul-Sep earnings

Informist, Tuesday, Oct 26, 2021

 

By Joe Milton

 

MUMBAI – Shares of Kotak Mahindra Bank gained on robust loan growth and asset quality improvement in the September quarter, which triggered the addition of long positions by traders. 

 

Following the trend of strong earnings from frontline banks, Kotak Mahindra Bank too reported upbeat Jul-Sep earnings. The bank posted a net profit of 20.3 bln rupees, beating analysts’ estimate of 18.6 bln rupees. 

 

On the back of robust earnings, shares of Kotak Mahindra Bank gained 4% and touched their all-time high of 2,240 rupees. Traders believe that the northward momentum in the stock will continue, which prompted them to initiate long positions in the October futures of the bank. 

 

Open interest in the October futures of Kotak Mahindra Bank surged 13.2% to 7.9 mln, and in the spot market, the stock closed 2.6% higher at 2,210.95 rupees. Analysts expect the stock to inch further higher towards 2,300 rupees in the coming sessions. 

 

Apart from this, shares of Tech Mahindra surged 7% and touched their record high of 1,630 rupees. However, the stock is expected to consolidate in the near term, and one can enter it at the 1,520-rupees level, said Ratnesh Goyal, senior technical and derivative analyst at Arihant Capital Markets. 

 

Open interest in the October futures of Tech Mahindra fell 7% to 8.3 mln as traders covered some of their short positions. 

 

Among other stocks, short-covering was witnessed in Glenmark Pharmaceuticals, Dalmia Bharat, Mphasis, and Mahindra & Mahindra Financial Services, as open interest in the October futures of these stocks fell 20-30% with a price rise in the spot market. 

 

Today, sectoral rotation led to Nifty Bank’s underperformance, but analysts believe that the index is poised to move towards 42000 points in the near term. Nifty Bank index closed 0.1% higher at 51238.30 points.

 

In the options of Nifty Bank, maximum addition of open interest was at the 42000 call option strike price. Open interest in the October futures of Nifty Bank was up 4.1% at 1.5 mln as traders continued to add some long positions. 

 

The Nifty 50 index gained sharply in the last hour of trading and closed 0.8% higher at 18268.40 points. The maximum build-up of open interest was at the 18000 strike price put option, and analysts expect the index to find support at this level on the downside.  

 

-–Nifty 50 Oct ended at 18350.00, up 204.55 points; 81.60-point premium to spot index

-–Nifty 50 Nov ended at 18387.70, up 202.40 points; 119.30-point premium to spot index

-–Nifty 50 Dec ended at 18450.00, up 180.45 points; 181.60-point premium to spot index

 

Total turnover in the futures and options segment of the NSE was at 57.2 trln rupees today compared to 64.3 trln rupees on Monday. 

 

The turnover in index options was at 51.4 trln rupees compared to 57.84 trln rupees in the previous session. The total premium turnover of index and stock options was 278.2 bln rupees compared with 364.7 bln rupees on Monday.

 

Tech Mahindra, ICICI Bank, Tata Motors, Kotak Mahindra Bank, Reliance Industries, Tata Steel, Infosys, Bharti Airtel, Vedanta Ltd, State Bank of India, Axis Bank, and HDFC Bank 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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Source: Cogencis

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