Equity Futures: Positioning shows Bajaj Finance may extend losses

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Equity : Positioning shows Bajaj Finance may extend

Friday, Mar 27

 

By Apoorva Choubey 

 

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MUMBAI – Buying in put options of Bajaj Finance and short positions in its April futures suggest that the could fall 21% more in the coming sessions and test the 2,000-rupee level. 

 

Shares of Bajaj Finance tanked 10% to end at 2,542.30 rupees after brokerage firm Bernstein Research downgraded its rating, as the unsecured consumer lending business could face difficulties in a pandemic .

 

in the April futures of the stock surged 8%. 

 

The 2,000-rupee price put option of the stock has the highest number of open positions and was aggressively bought today, which lifted premiums by 30%. This suggests that see the stock falling to these levels. 

 

Bernstein Research cut its rating on Bajaj Finance’s stock to “underperform” from “outperform”, and cut its target price by 64% to 1,740 rupees, dealers said.

 

Shares of Bajaj Finance have fallen over 43% this month on concern its unsecured consumer loan business could see high delinquencies because of job losses triggered by the pandemic.

 

Short positions were seen in the futures of parent Bajaj Finserv too. 

 

Traders also added long bets in certain banks after an interest rate cut and reduction in cash reserve ratio was announced. 

 

However, traders were wary of recent gains in the market sustaining after the Reserve Bank of India refrained from giving and inflation projections citing uncertainties arising out of the coronavirus spread.   

 

Activity in options of the Nifty 50 was extremely mixed, with call and put options seeing selling and buying across strikes.  

 

Open interest in the April futures jumped 11% to 11.2 mln and the contract ended at a premium of 11.75 points to the spot index. 

 

The Nifty 50 ended at 8660.25, up 18.80 points or 0.2% from the previous close. 

 

–Nifty 50 Apr ended at 8672.00; down 5.25 points; 
–Nifty 50 May ended at 8690.00; down 15.15 points; 29.75-point premium to spot

–Nifty 50 June ended at 8714.95; 54.70-point premium to spot

 

The total turnover in the futures and options segment of the National Stock Exchange tanked to 4.3 trln rupees from 14.5 trln rupees on Thursday.

 

In the index options segment, the turnover declined to 3.4 trln rupees from 13.1 trln rupees in the previous session. The total premium turnover of the index and stock options fell to 88.6 bln rupees from 115.1 bln rupees.

 

Futures and options contracts of State Bank of India, ICICI Bank, HDFC Bank, Axis Bank, , Bajaj Finance, Housing Development Finance Corp, Infosys, Bharti Airtel, IndusInd Bank,  Kotak Mahindra Bank and Infosys were among the most actively traded.  End

 

Edited by Arshad Hussain

 

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