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Equity Futures: Bullish bets in FMCG cos as profitability woes ease

Informist, Monday, Jul 4, 2022

 

By Vidya Sreedhar

 

MUMBAI – Fast moving consumer goods stocks were the flavour of the day in the equity market today, as prospects of an improvement in their profitability led traders to take bullish bets. 

 

Benchmark Malaysian palm oil futures fell for the second session and have hit their lowest level since December 2021, according to reports. As palm oil is a key raw material for companies making biscuits, confectioneries, and personal care products, a fall in their prices will reduce input cost pressure and improve margins. 

 

Following gains in the cash market, traders initiated long positions in the futures of Hindustan Unilever and Britannia Industries. Open interest in the July futures of HUL rose nearly 8% to 13.4 mln, and in Britannia Industries surged nearly 16% to 2.2 mln, provisional data showed. 

 

In the cash market, shares of HUL ended 4% higher at 2,375.20 rupees and those of Britannia ended 3.2% higher at 3,700.45 rupees. 

 

The FMCG pack is one of the rare sectors seeing some follow-up buying, and could be one of the outperformers in the current series, an analyst at a domestic brokerage firm said. 

 

The analyst is bullish on HUL and expects the stock to test 2,400-2,450 rupees in the near term.     

 

Gains in FMCG stocks and banks helped the Nifty 50 gain momentum in the last hour and end higher today. The 50-stock index ended 0.5% higher at 15835.35 points. Open interest in the July futures of the index rose more than 8% to 12.8 mln. 

 

But analysts said much of the positions in the derivatives segment of the index are on the short side, as foreign investors fret over a likely recession in the US economy due to slowing growth and aggressive rate hikes by the Federal Reserve. 

 

Some analysts are pinning their hopes on further gains in the Nifty 50, given that it has managed to bounce back and move past the crucial support of 15700 points today. 

 

“Till the time index manages to sustain above the same (15700), any minor correction could be seen as a buying opportunity in the near term,” said Osho Krishan, senior technical and derivatives analyst at Angel One. 

 

But 15950-16000 will remain key hurdles for the index, and only a breakthrough could ensure the bullish momentum will continue in the coming sessions, he said. 

 

–Nifty 50 Jul closed at 15831.30, up 77.05 points; 4.05-point discount to spot index

–Nifty 50 Aug closed at 15857.20, up 68.85 points; 21.9-point premium to spot index

–Nifty 50 Sep closed at 15900, up 74.75 points; 64.7-point premium to spot index

 

The total turnover in the futures and options segment of the National Stock Exchange rose to 60.8 trln rupees today from 54.94 trln rupees on Friday.

 

At nearly 59 trln rupees, the turnover in index options was higher than 52 trln rupees in the previous session. However, the total premium turnover of index and stock options was lower at 332 bln rupees compared with 378 bln rupees on Friday. 

 

ITC, Hindustan Unilever, Tata Consultancy Services, ICICI Bank, HDFC Bank, Adani Enterprises, Infosys, Maruti Suzuki, Oil and Natural Gas Corp, Bajaj Finance were the most actively traded underlying stocks today.  End

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. 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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