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Equity Futures: Bearish bets in Laurus Labs as growth outlook bleak

Informist, Tuesday, Nov 29, 2022

 

By Vaibhavi

 

MUMBAI – There was a spurt of bearish bets in the futures and options of Laurus Labs as a bleak growth outlook for the pharmaceutical company prompted investors to shun the stock in the cash market today.

 

Shares of the company plummeted nearly 10% and hit their lowest level in over 19 months today after brokerage firm Kotak Institutional Equities downgraded its rating on the stock to “sell”. The brokerage firm raised caution and said that the true extent of the adverse impact on margins will unravel now as the sales of the drugmaker’s antiviral drug, 

Paxlovid, continue to recede.

 

Consequently, the stock hit a low of 407.50 rupees in the cash market, which prompted traders to unwind their positions at higher strike price put options of 450 rupees.

 

Meanwhile, fresh buying was seen across lower strike price put options of 360-400 rupees that sharply lifted premiums across these contracts. Strong buying at these strike prices reflects fear among investors that the stock will fall to these levels in the near term.

 

The bearishness was also felt in the futures segment as open interest in the December futures of the stock shot up 50%, reflecting a burst of short positions.

 

The stock has been an underperformer for the past one year, and going by the strong addition of bearish bets in its derivatives segment, it is likely to bottom out near 380 rupees, said Nirav Harish Chedda, technical and derivative analyst at Nirmal Bang Institutional Equities. The stock has corrected over 24% in the past one year.

 

Chedda also believes that a further fall towards 380 rupees will help the stock find its bottom and trigger covering of short positions thereafter. On that account, he suggests investors to enter the stock around that level.

 

Today, the scrip ended over 9% lower at 408.60 rupees.

 

On the sectoral front, hopes of softening raw material prices and a pickup in rural demand triggered addition of long positions in Britannia Industries, Dabur India, Hindustan Unilever, ITC, and Nestle India.

 

The Nifty 50 hit a fresh intraday all-time high of 18678.10 points today. Analysts now expect some cooling off in the coming sessions as the index is likely to face a resistance around 18700 points. The call option of 18700 strike price contracts also amassed the highest addition of open interest.

 

Today, the Nifty 50 ended at a fresh record closing high of 18618.05 points, up 0.3%.

 

–Nifty 50 Dec closed at 18731.00, up 36.90 points; 112.95-point premium to spot index

–Nifty 50 Jan closed at 18828.10, up 30.45 points; 210.05-point premium to spot index

–Nifty 50 Fed closed at 18916.50, up 29.75 points; 298.45-point premium to spot index

 

The total turnover in the futures and options segment of the National Stock Exchange was at 138.91 trln rupees, against 102.27 trln rupees on Monday.

 

The turnover in index options was 136.42 trln rupees, compared with 99.64 trln rupees in the previous session. The total premium turnover of index and stock options stood at 344.68 bln rupees, compared with 357.7 bln rupees on Monday.

 

ICICI Bank, Bandhan Bank, Maruti Suzuki India, Punjab National Bank, Hindustan Unilever, HDFC Bank, Adani 

Enterprises, Reliance Industries, Axis Bank, and State Bank of India were among the most actively traded underlying stocks.  End

 

Edited by Vandana Hingorani

 

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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© Informist Media Pvt. Ltd. 2022. All rights reserved.

Source: Cogencis

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