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Equity Futures: Windfall tax triggers bearish bets in ONGC, RIL

Informist, Friday, Jul 1, 2022


By Vaibhavi


NEW DELHI – Bearish bets swamped shares of oil producers, Oil and Natural Gas Corp and Reliance Industries today following the government’s decision to impose an additional tax on windfall gains made by these companies from higher crude oil prices. 


Concerns that the additional tax will dent earnings pulled down shares of RIL by nearly 9% in the spot market. This was the stock’s biggest single-day decline since November 2020. The stock ended over 7% down at 2,408.70 rupees, off the over three-month low of 2,365 rupees touched during the day.


Shares of Oil and Natural Gas Corp plunged to their lowest level since September 2021 intraday and ended with more than 13% losses.   


Traders added short positions in the futures segment of the two stocks, anticipating further downside. As a result, open interest in the July futures contracts of RIL and ONGC shot up over 27% and 57%, respectively.


Put option traders shifted bets to lower strike prices, which saw premiums across deep out-of-the-money strike prices skyrocket. The 2,200-, 2,300- and 2,400-rupee strike prices saw significant addition of open interest. 


Amidst persisting selling pressure, RIL stock is likely to first find support at around 2,370 rupees, that coincides with the low seen in May, said Rajesh Bhosale, technical and derivatives analysts at Angel One.


However, a fall below that level can see the stock spiralling lower towards 2,250-rupee levels, Bhosale said.  

Just like RIL, positioning in the derivatives of ONGC also indicates further losses. As premiums across 100-130-rupee strike price put options surged manifold, analysts anticipate the stock to slide towards 120 rupees in the near term.


Substantial concentration of open interest was also seen at the 120-rupee strike price put option. 


Meanwhile, the Nifty 50 remained under pressure throughout the session. While a sharp fall in RIL and ONGC pulled the index deep into the red during the first half, gains across financial services and consumer goods companies helped the Nifty 50 recoup much of its losses.  


Today, the Nifty 50 ended marginally lower 0.2% at 15752.05 points, after falling to a low of 15511.05 points earlier in the day.


The 15800 and 16000 call options saw substantial open interest concentration while among put options, accumulation was at the 15500 and 15600 strike prices.  


The Nifty 50 is expected to face resistance at higher levels, and is likely to trade in a broad range of 15500-16000 points, said Chandan Taparia, vice president-equity derivatives and technicals at Motilal Oswal Financial Services.


The weakness today resulted in sharp jump in short positions in the July futures contract of Nifty 50, as indicated by the over 9% rise in open interest. 


–Nifty 50 Jul closed at 15774.00, up 29.65 points; 21.95-point premium to spot index

–Nifty 50 Aug closed at 15805.00, up 12.90 points; 52.95-point premium to spot index

–Nifty 50 Sep closed at 15849.00, down 136.40 points; 96.95-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange was 54.94 trln rupees compared with 204.83 trln rupees on Thursday.


The turnover in index options was 51.85 trln rupees, significantly lower than 201.41 trln rupees in the previous session. The total premium turnover of index and stock options was 377.85 bln rupees compared with 467.85 bln rupees on Thursday.

The most-actively traded underlying stocks were Reliance Industries, Oil and Natural Gas Corp, ITC, HDFC Bank, ICICI Bank, Infosys, Bajaj Finance, Adani Enterprises, Titan Co and Maruti Suzuki.




Edited by Maheswaran Parameswaran



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Source: Cogencis

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