Informist, Monday, Oct 18, 2021
By Ankika Biswas
MUMBAI– On a day when profit booking trickled into most frontline sectors, the fast-moving consumer goods space bore the brunt of the selling pressure, with key stocks such as Hindustan Unilever and ITC falling to the bottom of the Nifty 50’s ranking screen. This prompted investors to place bearish bets in the derivatives segment of both the FMCG scrips.
The 14% uptick in the open interest of the October futures contract of HUL suggested the build-up of short positions, as the stock fell 5% and hit a two-month low of 2,520.50 rupees, in the spot market following lower-than-expected net profit and volume growth in Jul-Sep.
Additionally, traders sold the out-of-the-money call options of 2,600-, 2,700- and 2,800-rupee strike prices, resulting in a 53-63% fall in their premiums.
Analysts believe that the correction in the stock is likely to run deeper to 2,450 rupees, where some buying interest can be seen. With more room for correction, they advised investors to avoid buying the stock at current levels.
Today, the stock closed 4% lower at 2,546.80 rupees, snapping two days of gains.
As for the other major laggard, a build-up of short positions was also seen in ITC amid fears of further losses, as indicated by the 10% rise in the open interest of the October futures contract of the stock.
The sharp fall in the scrip in the spot market came on the back of resurfacing concerns over possible hike in taxes on tobacco, after reports said that the government has constituted an expert panel for policy on the subject.
Analysts expect the stock to fall further to 235 rupees, where buying interest is likely to be seen. With more correction on cards, they advised investors to avoid buying shares of ITC, as well.
Snapping a five-day winning streak, the stock closed over 6% lower at 245.95 rupees and was the worst hit among Nifty 50 constituents.
Weighed down by a sharp fall in FMCG stocks and most of the other frontline sectors, the Nifty 50 snapped a seven-day winning streak today. A gap-up opening above the 18600-point mark today fuelled concerns around stretched valuations and triggered investors to book profits.
Traders sold the index’s out-of-the-money call options of 18700, 18750 and 18800 strike prices, leading to a 47-52% fall in their premiums. Meanwhile, they bought the out-of-the-money put options of 17900 and 18000 strike prices, leading to a 13% and 25% upmove in their premiums, respectively.
The futures segment continued to see muted action as investors refrained from taking aggressive bets amid valuation concerns. The open interest of the October futures contract was up 2%.
The Nifty 50 closed 0.3% lower at 18418.75 points, after hitting a lifetime high of 18604.45 points during the day.
-–Nifty 50 Oct ended at 18437.05, down 58.35 points; 18.30-point premium to spot index
-–Nifty 50 Nov ended at 18483.25, down 48.80 points; 64.50-point premium to spot index
-–Nifty 50 Dec ended at 18556, down 42.95 points; 137.25-point premium to spot index
Total turnover in the futures and options segment of NSE was 63.25 trln rupees today, compared with 46.2 trln rupees on Monday.
The turnover in index options was about 57.12 trln rupees compared with 40.7 trln rupees in the previous session. The total premium turnover of index and stock options was 345.70 bln rupees compared with 303.43 bln rupees on Monday.
Indian Railway Catering & Tourism Corp, Indian Energy Exchange, Tata Power, Tata Motors, HUL, ITC, Infosys, Tata Steel, Reliance Industries and Larsen & Toubro were the most actively traded stocks today. End
Edited by Maheswaran Parameswaran
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Source: Cogencis
