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Equity Futures: Short bets in UltraTech; 6,800 rupees key support

Informist, Monday, Jan 23, 2023


By Vivek Kumar


MUMBAI – Open interest in futures contracts of UltraTech Cement rose sharply today and the stock saw its worst single-day decline in over seven months after the company’s weaker-than-expected earnings for Oct-Dec, indicating the addition of short positions. Data indicated that the 6,800-rupee level is a key support level for the stock, while on the upside, 7,000 rupees is an immediate resistance.


Today, the stock closed 4.6% lower at 6,849.75 rupees on the National Stock Exchange. It also hit a two-month low of 6,830 rupees during the day.


Premiums on the 7,000- and 7,100-rupee call options slumped more than 90% each, indicating that traders do not expect the stock to rebound to these levels, at least in the near term. These contracts also witnessed the highest addition of open interests today. On the put side, premiums on the 6,800- and 6,700-rupee options soared 252% and 133%, respectively.


“There has been clear build-up of short positions. We saw unwinding of positions around the 7,000-rupee strike price call options,” said an analyst at Axis Securities. The analyst expects the stock to hold the support of 6,800 rupees.


In the January futures contract, which will expire on Wednesday, open interest rose nearly 14% to 1.8 mln. In the next month’s futures contract, open interest soared 230% to 1.2 mln, according to provisional data. This indicated short positions were added in both the contracts.


Meanwhile, the Nifty 50 ended with gains of 0.5% today to close at 18118.55 points. However, surpassing 18200 points will be important for the positive momentum to sustain, analysts said.


The maximum build-up of open interest was seen in at-the-money strike price of 18100 points on both the call and put sides of the Nifty 50. The premiums on major call options rose, while major put option premiums fell today.


“The ideal strategy would be to sell 18100 call and put together and to buy the outer arms (out-of-the-money options) for protection,” the analyst said. 

–Nifty 50 Jan closed at 18150.80, up 95.00 points; 32.25-point premium to spot index

–Nifty 50 Feb closed at 18231.95, up 100.35 points; 113.40-point premium to spot index

–Nifty 50 Mar closed at 18302.50, up 93.40 points; 183.95-point premium to spot index


The total turnover in the futures and options segment of the NSE was 120.83 trln rupees, against 96.49 trln rupees on Friday.


The turnover in index options was 115.44 trln rupees compared with 91.72 trln rupees in the previous session. The total premium turnover of index and stock options was 371.63 bln rupees compared with 368.97 bln rupees on Friday.


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


Edited by Avishek Dutta


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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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