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Equity Futures: Long bets in Tata Chemicals after strong earnings

Informist, Monday, May 2, 2022

 

By Ankika Biswas

 

MUMBAI – Traders added bullish bets in the derivatives counter of Tata Chemicals today, given the stock surged over 11% to a three-month high. A strong set of earnings for Jan-Mar boosted sentiment for the stock.

 

The company’s consolidated net profit surged manifold on year, while operating margin saw a sharp expansion.

 

The near 21% rise in open interest of May futures contract suggested strong build-up of long positions. Meanwhile, premiums across the 1,080- to 1,200-rupee strike price call options skyrocketed on expectations of the stock testing those levels.

 

Given the stock’s breakout today was backed by a spurt in volumes and followed with bullish bets, analysts said that the short-term trend remains positive. In case, the stock manages to surpass the 1,050-rupee mark, further upside towards 1,130-1,140 rupees is seen.

 

However, as the scrip jumped today, analysts recommended only existing investors with long positions to hold on to their setting. The stock closed 10% higher at 1,033 rupees, after rising to 1,048 rupees.

 

As for Nifty 50 stocks that saw considerable derivatives action today, bearish bets were added in Wipro as the stock fell 3% due to a sequential contraction in operating margin in Jan-Mar and weak revenue guidance for the June quarter.

 

Given the short-term trend remains negative, analysts expect correction in the stock to run towards 450 rupees, asking traders to use any pullback moves as an opportunity to exit. Today, the stock ended nearly 3% lower at 495 rupees.

 

Meanwhile, some bullish bets were seen in IndusInd Bank after the lender’s net profit rose sharply in Jan-Mar.

 

Analysts expect the strength in the stock to continue to 1,050-1,060 rupees, as the breakout above the 1,000-rupee hurdle was backed by strong volumes. Today, it closed 4% higher at 1,018.10 rupees.

 

For the headline index, traders sold out-of-the-money call options after the Nifty 50 continued with its slide, briefly slipping below the 17000-mark. This was also likely on some caution ahead of the US Federal Reserve meeting outcome on Wednesday. Indian financial markets will be shut on Tuesday for Id-Ul-Fitr.

 

Today, the index ended 0.2% lower at 17069.10 points, after slumping to 16917.25 points. Open interest of the May futures contract was up nearly 9%.

 

Analysts believe that any directional move will only kick in on a breach of the 16900-17400 range, recommending traders to go short once it surpasses the 16900-mark, with a target of 16600 points. 

 

–Nifty 50 May ended at 17080.00, down 55.25 points; 10.90-point premium to spot index

–Nifty 50 Jun ended at 17098.00, down 65.70 points; 28.90-point premium to spot index

–Nifty 50 Jul ended at 17120.00, down 63.50 points; 50.90-point premium to spot index

 

The total turnover in the futures and options segment of the National Stock Exchange was about 65.17 trln rupees, a tad higher than 63.4 trln rupees on Friday.

The turnover in index options was 62.73 trln rupees, against 60.3 trln rupees during the previous session. The total premium turnover of index and stock options was 364.3 bln rupees, lower than 403.9 bln rupees on Friday.

 

The most actively traded underlying stocks were HDFC Bank, Housing Development Finance Corp, Reliance Industries, Tata Chemicals, IndusInd Bank, Wipro, Axis Bank, Tata Steel and Tata Motors.  End

 

Edited by Arshad Hussain

 

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. 2022. All rights reserved.

Source: Cogencis

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