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Equity Futures: Bearish bets hint at more pain for Bharti Airtel

Informist, Wednesday, Jan 11, 2023


By Vaibhavi


NEW DELHI – Shares of Bharti Airtel witnessed a sharp fall in the cash market today as investors took notice of JPMorgan’s ratings downgrade for the stock and the red flags pointed by the brokerage. The downgrade prompted investors to turn cautious on the stock and add short positions in the futures segment in anticipation of more correction.


JPMorgan reportedly downgraded the stock to “underweight” from “overweight” and also slashed its target price by over 17%. The firm also expects negative surprises from the company’s higher-than-expected capital expenditure. That coupled with the absence of tariff hikes as the company aims to bring more customers onboard for its 5G services will drive down returns, the firm said.


Consequently, the stock fell over 3% in the cash market today. Open interest in the January futures of the stock also shot up 15% as a spurt of short positions were added to the contract. The sharp jump in short positions indicates expectations of prolonged weakness in the stock.


The fall in today’s session also dragged the stock below its crucial support of 800 rupees, which not only intensified selling but also trapped traders at the put options of that strike price. Traders unwounded positions at the 800-rupee strike price put options and added fresh positions at lower out-of-the-money strike prices as they expect the stock to witness a steeper correction to lower levels in the upcoming sessions.


Premiums across lower out-of-the-money strike price put options of 760-700 rupees skyrocketed as traders aggressively added fresh positions at these contracts.


“The stock has now entered into a corrective phase, and we may see more losses in the coming sessions. Follow-up selling pressure in the stock is likely to take it lower towards 720-700-rupee levels in the sessions to come,” said Ruchit Jain, lead research, 5paisa.com.


A further fall towards 720-700-rupee levels would be a great opportunity for investors to add fresh bets in the stock, Jain added.


Today, shares of Bharti Airtel ended 3.4% lower at 765.55 rupees on the National Stock Exchange.


As for the Nifty 50, caution ahead of the release of the US inflation print for December, due on Thursday, prompted investors to refrain from placing any aggressive bets in the market. As a result, traders turned active near the at-the-money strike prices in both put and call options, which suggests the rangebound trade is likely to continue further.


Moreover, the bias remains on a slightly negative side as writing across call options was much more severe than that across put options, analysts said. On the call side, the 18000-strike price contract garnered the maximum addition of fresh positions while among put options, maximum open interest was added in the 17800-strike price contract.


On that account, analysts expect 17800 points to be a strong support for the index, a fall below which can unleash more weakness. Today, the Nifty 50 ended 0.1% lower at 17895.70 points.


–Nifty 50 Jan closed at 17960.00, down 26.25 points; 64.30-point premium to spot index

–Nifty 50 Feb closed at 18027.00, down 25.75 points; 131.30-point premium to spot index

–Nifty 50 Mar closed at 18100.10, down 27.10 points; 204.40-point premium to spot index


The total turnover in the futures and options segment of the NSE was 202.96 trln rupees, against 226.39 trln rupees on Tuesday. 


The turnover in index options was 200.17 trln rupees compared with 223.25 trln rupees in the previous session. Total premium turnover of index and stock options was 597.77 bln rupees compared with 599.73 bln rupees on Tuesday.


Bharti Airtel, Tata Motors, HDFC Bank, Axis Bank, ICICI Bank, Reliance Industries, Infosys, Adani Enterprises, Tata Consultancy Services and State Bank of India were among the most actively traded underlying stocks.  End


Edited by Tanima Banerjee


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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