Informist, Thursday, Dec 23, 2021
By Ankika Biswas
MUMBAI – Premiums on most out-of-the-money call options of Biocon surged today, as the stock soared over 4% in the cash market. Buying in the Biocon stock was triggered by reports that the company is in advanced talks with Mylan to combine their biosimilar businesses to create a large pharmaceutical company in which it will hold controlling stake.
Call options across the 395-430 rupee strike prices saw their premiums surge three- to seven-fold on expectations of the stock testing those levels. Bullish bets were also seen in the futures segment, with the open interest of the December contract rising over 3%.
Ruchit Jain, trading strategist at 5paisa.com, believes that the Biocon stock may test 385-388 rupees going forward. He said that if the stock manages to move past the key 388-rupee mark, further short covering will unlock the next leg of upmove.
Jain recommends that investors hold on to their long positions. Today, the stock closed 4% higher at 374.35 rupees, gaining for the second session.
Bullish bets were also seen in the derivatives segment of Jubilant Foodworks as the stock surged nearly 6% in the cash market on reports that the company has increased prices by 5-6% to offset the impact of high raw material costs.
While the 4% rise in open interest of the December futures contract suggested build-up of long positions, premiums on most out-of-the-money call options more than doubled.
Given that the stock has managed to remain firm above its support of 3,470 rupees, which is its 200-day moving average, Jain expects further gains. However, he believes that any significant rise is unlikely as the stock may face some selling pressure at its hurdle zone of 3,650-3,700 rupees.
He advises traders to book profits at the resistance levels. Today, the stock closed more than 3% higher at 3,534.45 rupees.
Gaining for the third session, the Nifty 50 closed above the 17000-point level, as slight easing of concerns around the Omicron variant of COVID-19 whetted the risk-appetite of investors.
While the headline index has largely recovered from the recent steep correction, the rise was mostly on the back of covering of short positions. With the majority of short positions now out of the system, only fresh ones will determine the market trajectory going forward, Jain added.
However, the fact that the support base for Nifty 50 has inched higher to 16800 points, analysts believe this is a positive for the market. Consequently, the index is seen facing a hurdle at 17200 points, but a sharp fall from current levels is unlikely.
Today, the Nifty 50 closed at 17072.60 points, up 0.6%, after testing an intraday high of 17118.65 points.
Premiums on the 17000, 17300 and 17500 strike prices, expiring on Dec 30, rose 8-31%, while activity in the futures segment was largely muted.
-–Nifty 50 Dec ended at 17059, up 85.65 points; 13.6-point discount to spot index
-–Nifty 50 Jan ended at 17114.70, up 88.20 points; 42.1-point premium to spot index
-–Nifty 50 Feb ended at 17151, up 85.25 points; 78.4-point premium to spot index
Total turnover in the futures and options segment of the National Stock Exchange was 140.88 trln rupees, significantly higher than 73.07 trln rupees on Wednesday.
The turnover in index options was 138 trln rupees against 70.2 trln rupees the previous day. The total premium turnover of index and stock options was at 294.83 bln rupees, higher than 274.6 bln rupees on Wednesday.
Reliance Industries, Infosys, Bajaj Finance, JSW Steel, ITC, HDFC Bank, Tata Consultancy Services, and Bharti Airtel were some of the most actively traded underlying stocks. End
Edited by Ashish Shirke
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Source: Cogencis
