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Equity Futures: Metal cos see long bets as China eases COVID curbs

Informist, Tuesday, Dec 27, 2022

 

By Vivek Kumar

 

MUMBAI – Traders added bullish positions in metal companies today as China’s decision to further ease COVID-19 restrictions gave hope that shares of these companies will continue to shine in the near future. China is the biggest consumer of metals and an exit from strict COVID restrictions there could boost prices of base metals.

 

The Nifty Metal index soared 4.2% today to record its biggest single-day gain since May 17. Shares of the sector’s frontline companies such as JSW Steel, Tata Steel and Hindalco Industries ended with 4-7% gains.

 

“There has been huge short covering as well as build-up of long positions,” said an analyst at Axis Securities. The analyst expects metal companies to rebound to their previous high levels in the next few sessions.

 

Aggressive buying was seen at 490- and 500-rupee call option of Hindalco Industries today and these contracts witnessed maximum addition of open interest on the call side.

 

“The swing high for Hindalco is around 484 rupees and it is likely to test this level in the next sessions,” said Anshul Jain, senior technical analyst at Lakshmishree Investment and Securities. This indicates an upside of another 3% as the stock closed at 471 rupees today.

 

In the January options contract of Tata Steel, the premium on 115 rupees call soared 157% today, and it witnessed maximum addition of open interest. Meanwhile, on the put side, maximum addition of open interest was seen at 110 rupees with the contract’s premium falling 50%.

 

Jain said Tata Steel is his top pick in the sector and could test 116-118 rupees level going ahead. From a longer-term perspective of six-eight months, Jain believes the stock could move towards 138 rupees level. Tata Steel today closed at 111.15 rupees.

 

Analysts said rollovers were also likely to be relatively more positive for metal companies compared to others, given the gains seen on the counters.

 

“Post the run-up in the next two days, we may see some pullback, but that could be a potential opportunity to go long with stop loss at today’s lows,” said the analyst at Axis Securities.

 

Sharp gains in metal companies helped benchmark indices stay higher for most of the session today. The Nifty 50 ended with 0.7% gains at 18132.30 points as other sectors like banking and information technology also contributed in the later half.

 

On the near term market trend, Nandish Shah, senior technical and derivatives analyst at HDFC Securities, said, “Market will rise, but the move will be gradual because some global markets are closed and volumes are also lower.” Shah sees support for the Nifty 50 at 17800 level.

 

In the options contract expiring this week, maximum open interest build-up on call side was at 18200 points level, while on the put side it was at 18000 points level. 

 

–Nifty 50 Dec closed at 18144.15, up 116.85 points; 11.85-point premium to spot index

–Nifty 50 Jan closed at 18256.10, up 121.65 points; 123.80-point premium to spot index

–Nifty 50 Feb closed at 18342.00, up 118.25 points; 209.70-point premium to spot index

 

The total turnover in the futures and options segment of the National Stock Exchange was 216.02 trln rupees, against 137.96 trln rupees on Monday.

 

The turnover in index options was 211.55 trln rupees compared with 133.06 trln rupees in the previous session. The total premium turnover of index and stock options was 593.44 bln rupees compared with 533.94 bln rupees on Monday.

 

Adani Ports and Special Economic Zone, Reliance Industries, HDFC Bank, Adani Enterprises, ICICI Bank, State Bank of India, Ambuja Cements, Kotak Mahindra Bank, Tata Motors, Axis Bank, Infosys and Bajaj Finance were among the most actively traded underlying stocks.  End

 

Edited by Aditya Sakorkar

 

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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