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Equity Futures:IT cos may rise as defensives in play amid COVID woes

Informist, Monday, Nov 29, 2021

 

By Vivek Kumar

 

MUMBAI – Traders placed bullish bets in information technology companies today amid buying in the defensive sectors in the market as there was uncertainty following concerns around the Omicron variant of COVID-19. The positive growth outlook for the sector also aided the view. 

 

Investors bought out-of-the-money call options of information technology companies as the sector led the gains in the headline indices today.

 

The premiums of out-of-the-money call options of 3,600 and 3,540 rupees of Tata Consultancy Services rose around 40% each, and those of 1,140, 1,180 and 1,220 rupees call options of HCL Technologies gained around 50% each. Meanwhile, major put option premiums of both the stocks fell.

 

Shares of HCL Technologies and Tata Consultancy Services were the top gainers among information technology companies in the cash market as they rose 2.1% and 1.6% to close at 1,133.15 rupees and 3,502 rupees, respectively.

 

Infosys and Tech Mahindra also witnessed a marginal rise in their call option premiums.

 

Though information technology companies have seen some correction lately, they are in a long-term uptrend cycle, said Ashish Chaturmohta, director research at Sanctum Wealth Management.

 

Chaturmohta prefers stocks such as TCS and Infosys in large-caps, while L&T Technology Services, Persistent Systems, KPIT Technology and Birlasoft look attractive to him in the mid-cap and small-cap segments.

 

Among specific stocks, Reliance Industries was the top contributor to Nifty 50’s gains today as the stock ended 1.2% higher at 2,441.50 rupees. However, the stock had risen 3.6% intraday and slid off highs amid some selling pressure.

 

The movement in the stock’s derivatives segment was muted today. The premiums of 2,600 and 2,500 rupees call options rose slightly, while those of 2,200 and 2,300 rupees put options fell over 10%. The open interest in the stock’s December futures contract rose 1.4% to 34.6 mln. 

 

Going ahead, the stock is expected to consolidate between 2,350 rupees and 2,550 rupees, as per analysts.

 

With gains in heavyweight Reliance Industries and information technology companies, the Nifty 50 also managed to end in the green. However, caution continued to prevail in the market amid the fear of the Omicron variant of COVID spreading.

 

Traders sold out-of-the-money call options of the benchmark index, while the premium of 17000 points call option ended 4% higher. The major put option contracts were also sold amid market uncertainty.

 

The Nifty 50 closed 0.2% higher at 17053.95 points with open interest in its futures contract rising 3.2% to 11.2 mln.

 

-–Nifty 50 Dec ended at 17093.25, up 41.10 points; 39.3-point premium to spot index

-–Nifty 50 Jan ended at 17159.05, up 40.00 points; 105.1-point premium to spot index

-–Nifty 50 Feb ended at 17199.05, up 33.50 points; 145.1-point premium to spot index

 

The total turnover in the futures and options segment of the NSE was 56.07 trln rupees today, compared to 52.47 trln rupees on Friday.

 

The turnover in index options was 53.29 trln rupees compared to 49.01 trln rupees in the previous session. The total premium turnover of index and stock options was 346.5 bln rupees compared to 349.76 bln rupees on Friday.

 

Reliance Industries, Tata Motors, Tata Power Co, ICICI Bank, State Bank of India, HDFC Bank, Kotak Mahindra Bank, Bharti Airtel, IndusInd Bank, Tata Steel and Tata Consultancy Services were some of the most actively traded underlying stocks.  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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© Informist Media Pvt. Ltd. 2021. All rights reserved.

Source: Cogencis

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