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Thursday, September 29, 2022

Equity Futures: Bullish bets in Dr Reddy’s hint at further gains

Informist, Thursday, Jun 9, 2022


By Abhishek Saini


MUMBAI – Traders placed bullish bets in the derivatives segment of Dr Reddy’s Laboratories due to hopes of a pick-up in COVID drug sales amid a resurgence in coronavirus cases. 


Shares of Dr Reddy’s Laboratories ended 3% higher at 4,322.90 rupees. The rise in the spot market was accompanied by a build-up of long positions in the June futures contract as open interest rose nearly 6%.  


The data in the options chain suggested a similar positive bias. Traders purchased out-of-the-money call options at 4,500-, 4,550- and 4,600-rupee strike prices. These contracts saw the addition of open interest and their premiums rose sharply. 


The 4,500-rupee strike price call option saw the highest open interest concentration, and the same level is seen as a strong resistance. 


Among put options, writers were active at the 4,200-rupee strike price, betting on the stock to stay above the levels. This signified that the stock will sustain gains on Friday, market participants said. 


The 4,200-rupee level is seen as a strong support, and in case the stock moves past the 4,500-rupee level, one could see another 10% upside, said Bhuvan Jindal, derivatives analyst at Edelweiss Wealth Management. 


Meanwhile, derivative bets in the headline Nifty 50 index also picked up today following the sharp gains in the index in the last hour of the session. 


Traders purchased call options across 16500-16800 strikes and the premiums of these contracts rose between 20-30%. 


This suggested that the upper band of Nifty 50’s range, which was earlier seen at 16600 points, may move a little higher to 16700 points, said Jindal. 


However, analysts do not rule out profit booking as investors may adopt a sell-on-rise strategy ahead of the US Federal Reserve meeting next week. 


At the lower end, the 16200-point put option continued to see the highest open interest concentration and is expected to act as a strong support. The same was seen today when the Nifty 50 rebounded after nearing the level. 


Today, the Nifty 50 recovered from an intraday low of 16243.85 points and ended 0.7% higher at 16478.10 points. The open interest in the June futures contract rose 5%. 


–Nifty 50 Jun closed at 16485.00, up 120.20 points; 6.30-point premium to spot index

–Nifty 50 Jul closed at 16512.90, up 127.35 points; 34.80-point premium to spot index

–Nifty 50 Aug closed at 16546.00, up 120.45 points; 57.90-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange was 199.68 trln rupees, higher than 120.54 trln rupees on Wednesday.


The turnover in index options was 197.57 trln rupees compared with 118.10 trln rupees in the previous session. The total premium turnover of index and stock options was 375.57 bln rupees, lower than 419.48 bln rupees on Wednesday.

The most actively traded underlying stocks were Reliance Industries, Infosys, HDFC Bank, State Bank of India, Tata Steel, Asian Paints, Tata Consultancy Services, Vedanta, Bajaj Finance and Tata Motors. End


Edited by Shirsha Thakur


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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