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Equity Futures: Fall in Tata Steel, JSW Steel triggers bearish bets

Informist, Tuesday, Jan 11, 2022


By Joe Milton


MUMBAI – Shares of Tata Steel and JSW Steel fell as brokerage firm Jefferies downgraded both the stocks on weak demand outlook for metals, which prompted traders to add bearish bets in the derivative segment of the stock. 


Open interest in January futures of JSW Steel surged 7.7% to 45.3 mln as the stock fell nearly 4.3% intraday in the cash market, which suggests initiation of short positions. Similarly, open interest in January futures of Tata Steel and Steel Authority of India rose 2.1 and 7.7%, respectively. 


Shares of Tata Steel, JSW Steel, and Steel Authority of India closed 3-5% lower today. 


In the put options of Tata Steel, the highest open interest was at 1,100 rupees strike price. In case of further correction, the stock is expected to find support at 1,070-1,100 rupees, and selling pressure will kick in if the stock fall below these levels, said Ratnesh Goyal, senior technical and derivative analyst at Arihant Capital Markets. 


On stock specific action, shares of Vodafone Idea plunged 23% intraday after the company decided to convert interest on adjusted gross revenue and spectrum dues into equity to government, which would dilute the stake of all existing shareholders. 


This dilution of stake does not bode well with the investors, and the stock closed 20.5% lower at 11.80 rupees. 


The sharp fall prompted Vodafone Idea put option sellers to unwind their position across 13-15 rupees strike price. At the same time, positions were added in the call options across 14-16 rupees strike price. 


On technical front, Vodafone Idea stock looks bearish, and sizeable open interest at 10 rupees put option strike price suggest consolidation of stock around these levels, analysts said. 


Overall, Nifty 50 managed to sustain above 18000 points, which prompted call writers to unwind their position at 18000 strike price, and shift to higher strikes across 18200-18400. Analysts expect the 50-stock index to face immediate resistance at 18200 points.


At the same time, considerable open interest was added at 18000 put option strike price of Nifty 50, which indicate that the support levels have shifted higher. 


Today, the headline index closed 0.3% higher at 18055.75 points. Open interest in January futures of Nifty 50 fell 1.4% to 10.4 mln, and the contract was up 0.2% at 18085.05 points. 


-–Nifty 50 Jan ended at 18085.05, up 36.85 points; 29.30-point premium to spot index
-–Nifty 50 Feb ended at 18134, up 37.55 points; 78.25-point premium to spot index

-–Nifty 50 Mar ended at 18190, up 41.25 points; 134.25-point premium to spot index

The total turnover in the futures and options segment of the NSE was at 64.5 trln rupees compared to 56.4 trln rupees on Monday.
The turnover in index options was at 61.6 trln rupees against 53.4 trln rupees the previous day. The total premium turnover of index and stock options was at 313.4 bln rupees compared to 316.5 bln rupees on Monday.
Among the most actively traded underlying stocks were Adani Enterprises, Reliance Industries, Vodafone Idea, Tata Steel, HCL Technologies, Tata Motors, Infosys, ICICI Bank, and Tata Power. End


Edited by Maheswaran Parameswaran


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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