Informist, Monday, Feb 28, 2022
By Joe Milton
MUMBAI – Shares of metal companies gained today as fear of disruption in supply amid the Russia-Ukraine conflict boosted metal prices globally, which improved prospects of the earnings of these companies. Traders initiated long positions in Hindalco Industries, Tata Steel, Jindal Steel & Power, Steel Authority of India, and Vedanta.
On the London Metal Exchange, prices of aluminium surged to a record high of $3,525 per tn as traders factored in supply disruption as an extremely volatile Russian rouble may lead buyers to shift away from the leading aluminium producer.
Besides aluminium, Russia is also one of the major exporters of steel and nickel.
An increase in aluminium prices augurs well for an integrated player like Hindalco Industries as it may boost the revenue and profitability of the company. This led to risk-on sentiment among investors towards shares of metal companies.
“Metal space has outperformed today and continuously looks too good, considering the way the price structure has formed and in the derivatives as well, we are witnessing long formations,” said Rajesh Bhosale, technical and derivative analyst at Angel One.
Traders placed bullish bets on Hindalco Industries with open interest in the stock’s March futures surging 23% to 41.4 mln. In the options segment, the highest open interest was at the 550-rupee strike price, while the stock closed beyond this level at 573.75 rupees in the cash market.
Earlier, shares of Hindalco Industries faced resistance at the 550-rupee level, but with today’s breakout, analysts expect the stock to touch 600 rupees in the near term. Today, the stock gained 8.6% and touched its all-time high of 580.05 rupees.
Apart from this, open interest in March futures of Tata Steel, Jindal Steel & Power, Steel Authority of India, and Vedanta rose 3-8% along with a rise in prices, which suggests the addition of long positions.
Though commodity-related stocks helped the Nifty 50 recover and inch towards 16800 points, the upside was capped as financial stocks played a spoiler. Selling pressure prevailed in bank stocks, with Nifty Bank index closing 0.6% lower at 36205.30 points.
On the back of this, the headline index closed 0.8% higher at 16793.90 points after touching an intraday high and low of 16815.90 and 16356.30 points, respectively.
Despite the gains in the 50-stock index, caution among traders was reflected in the put option segment of the index, as they largely refrained from shifting to higher strike prices.
The highest addition of open interest in the put option segment of the Nifty 50 expiring on Thursday was at 16500, followed by the 16000 strike price. In the call option segment, the highest open interest was at the 17500 strike price.
Options data on the Nifty 50 indicate a wide trading range for the index as uncertainty over how the Ukraine-Russia tensions will unfold made traders wary of placing any aggressive bets, analysts said.
–Nifty 50 Mar ended at 16789.80, up 133.75 points; 4.1-point discount to spot index
–Nifty 50 Apr ended at 16842.45, up 142.05 points; 48.55-point premium to spot index
–Nifty 50 May ended at 16877.00, up 125.70 points; 83.10-point premium to spot index
The total turnover in the futures and options segment of the National Stock Exchange was 62.8 trln rupees compared with 51 trln rupees on Friday.
The turnover in index options was 60.2 trln rupees against 48.2 trln rupees in the previous session. The total premium turnover of index and stock options was 501.9 bln rupees compared with 463.8 bln rupees on Friday.
The most actively traded underlying stocks were Reliance Industries, Tata Steel, Hindalco Industries, ICICI Bank, HDFC Bank, Tata Motors, Infosys, Tata Power, Bajaj Finance, and State Bank of India. End
Edited by Avishek Dutta
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Source: Cogencis
