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Equity Futures: Data hints support for Tech Mahindra at 1,000 rupees

Informist, Monday, Jan 16, 2023


By Vivek Kumar


MUMBAI – Traders covered short positions in Tech Mahindra Ltd today as the stock rose over 3% in the cash market and hit a one-month high of 1,035.75 rupees. Open interest in the January futures contract of the stock fell 3.5% to 11.9 mln, according to provisional data.


In the options contract, maximum addition of open interest today was seen at 1,030 rupees on the call side and 1,000 rupees on the put side. The premiums on call options rose today amid the bullish momentum in the stock.


While premiums on out-of-the-money call option rose today, the upside in the stock could be capped in the near term due to caution ahead of the company’s Oct-Dec earnings announcement later this month. 


“As a safe strategy, one can buy 1,040 rupees call for 14-16 rupees, sell 1,070 rupees call for 5-7 rupees and sell 1,100 rupees call for 2-3 rupees,” an analyst at Axis Securities said. In case the stock surpasses and sustains past 1,100 rupees, traders should unwind their positions, he said.


At today’s close, the premium on 1,040-rupee call option was 15.35 rupees and premiums on 1,070 and 1,100 rupees call options were at 5.45 and 2.15 rupees, respectively. The premium of these contracts soared 70-140% today.


On the put side, maximum build-up of open interest was seen at 1,000 rupees, indicating support for the stock around this level. The stock ended 3.1% higher at 1,034.45 rupees today.


Meanwhile, the Nifty 50 ended 0.3% lower at 17894.85 points, erasing its opening gains due to selling in banks, metal companies and select heavyweight stocks. The options data indicate negative bias continuing for the market in the upcoming sessions.


Traders sold 18000 points call option and the contract saw maximum addition of open interest today, followed by 18100 points. On the other hand, buying was seen in 18000 and 18050 points put options. Nevertheless, deeper-out-of-the-money put options were also sold indicating that sharp decline was unlikely.


The support for the Nifty 50 is seen at 17800 points level, while on the upside a stiff resistance is expected in the 18100-18150 points zone, the analyst said.


–Nifty 50 Jan closed at 17941.50, down 83.75 points; 46.65-point premium to spot index

–Nifty 50 Feb closed at 18016.00, down 81.60 points; 121.15-point premium to spot index

–Nifty 50 Mar closed at 18086.45, down 79.55 points; 191.60-point premium to spot index


The total turnover in the futures and options segment of the NSE was 145.78 trln rupees, against 112.21 trln rupees on Friday.


The turnover in index options was 142.54 trln rupees compared with 108.69 trln rupees in the previous session. The total premium turnover of index and stock options was 533.43 bln rupees compared with 509.3 bln rupees on Friday.


HDFC Bank, Federal Bank, Adani Enterprises, Reliance Industries, Axis Bank, Punjab National Bank, L&T Finance Holdings, Infosys, ICICI Bank, Wipro, Bajaj Finance, Bank of Baroda, Tata Consultancy Services, and State Bank of India were among the most actively traded underlying stocks. 



Edited by Tanima Banerjee



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Source: Cogencis

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