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Equity Futures: Weak JLR sales trigger bearish bets in Tata Motors

Informist, Monday, Oct 10, 2022


By Joe Milton


MUMBAI – Shares of Tata Motors fell sharply due to disappointing wholesale dispatches from Jaguar Land Rover in the September quarter, which triggered addition of short positions in the derivative segment of the stock. 


The wholesale volume of Tata Motor’s UK subsidiary stood at 75,307 units, excluding the joint venture operations in China, which was below the guided 90,000 units due to semiconductor supply issues. 


The weak sales prompted J.P. Morgan to reportedly downgrade Tata Motors to ‘neutral’ from ‘overweight’ and cut the target price to 455 from 525 rupees. 


Following this, the October futures of Tata Motors fell over 4% and the open interest jumped about 30%, indicating the build-up of short positions by traders. 


Today, the stock remained weak throughout the day and closed nearly 4% lower at 395.95 rupees. 


In the put options segment of Tata Motors, the highest open interest was at 400 rupees strike price, followed by 350 and 380 rupees strike prices. 


Today, short positions were added in the derivatives of Tata Motors, but 380-390 rupees is a strong demand zone hence aggressive shorts can be avoided, said Rajesh Bhosale, technical and derivative analyst at Angel One. 


Overall, the Nifty 50 was volatile throughout the day and touched an intraday low of 17064.70 points. However, it managed to partially recoup its losses and close above 17200 points mark. 


Global risk-off sentiment due to the likelihood of a more aggressive interest rate hike by the US Federal Reserve following the strong employment report weighed on the domestic benchmarks. 


Open interest in the October futures of Nifty 50 surged about 10%, while the contract fell 0.6%, which suggests that traders added short positions. 


In the near term, analysts expect the Nifty 50 to find immediate support at around 17000 points. This was in line with the bets by put option sellers as the highest open interest in the segment was at 17000 strike price. 


–Nifty 50 Oct closed at 17230.00, down 98.85 points; 11.00-point premium to spot index

–Nifty 50 Nov closed at 17282.00, down 91.80 points; 41.00-point premium to spot index

–Nifty 50 Dec closed at 17336.20, down 96.05 points; 95.20-point premium to spot index


The total turnover in the futures and options segment of the National Stock Exchange was 113.37 trln rupees, higher than 70.64 trln rupees on Friday. 


Turnover in index options was 110.60 trln rupees compared with 68.11 trln rupees on Friday. The total premium turnover of the index and stock options was 540.6 bln rupees.


Tata Motors, Tata Consultancy Services, Infosys, ICICI Bank, Reliance Industries, HDFC Bank, Axis Bank, Adani Enterprises, Tata Chemicals and Ambuja Cement were amongst the most actively traded underlying stocks today.




Edited by Maheswaran Parameswaran


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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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