Informist, Wednesday, Nov 10, 2021
By Vivek Kumar
MUMBAI – Traders placed bearish bets in metal companies today as the fall in prices of base metals in global markets dampened the outlook for the sector.
The open interest in November futures of frontline metal companies–Steel Authority of India, Hindalco Industries, JSW Steel and Tata Steel–rose 6-10%, indicating the addition of short positions.
The stocks of four companies ended 2-4% lower today and were among the top laggards in the market. Hindalco Industries and JSW Steel also hit their one-month lows during the day.
The premiums of out-of-the-money call options of these stocks fell, while out-of-the-money put options were bought, clearly indicating concern among investors amid inflation woes in China and the US.
After seeing a sharp run-up lately, metal prices have seen a substantial correction in the last one month, said Ashish Chaturmohta, director research, Sanctum Wealth Management. One should wait for the metal prices to settle down before taking any call to enter the stocks, he added.
Along with metal companies, several other stocks in large-cap and mid-cap space also witnessed decent activity in their derivatives segment.
Reports that Firstsource Solutions has cut its revenue growth guidance in the post earnings conference call sent its out-of-the-money put options skyrocketing. The stock hit an over two-month low of 178.90 rupees in the cash market before closing over 9% lower.
Meanwhile, the premiums of 200, 210 and 220 rupees call options of the stock fell 50-60%.
Bharat Heavy Electricals, India Cements and Strides Pharma Science are a few other stocks that witnessed bearish bets today following their Jul-Sep earnings.
With market participants continuing to focus on stock-specific bets, the action in the benchmark indices was muted in the cash market today as well. The Nifty 50 closed 0.2% lower at 18017.2 points.
The uncertainty in its near future momentum propelled investors to sell major call as well as put options before their expiry on Thursday. Further, the November futures contract of the index closed at a slight discount to the spot index today.
If the Nifty 50 manages to hold above 18000 points, it can head towards 18100-18150 points at the close on expiry day, Chaturmohta said.
-–Nifty 50 Nov ended at 18015.00, down 55.40 points; 2.2-point discount to spot index
-–Nifty 50 Dec ended at 18074.30, down 54.85 points; 57.1-point premium to spot index
-–Nifty 50 Jan ended at 18147.40, down 42.10 points; 130.2-point premium to spot index
Total turnover in the futures and options segment of the NSE was at 59.3 trln rupees today, compared to 48.4 trln rupees on Tuesday.
The turnover in index options was at 56.3 trln rupees compared with 45.2 trln rupees in the previous session. The total premium turnover of index and stock options today was 225.3 bln rupees, lower than 231.4 bln rupees on Tuesday.
Tata Steel, Reliance Industries, Bank of Baroda, Tata Motors, Bharti Airtel, Mahindra & Mahindra, Adani Enterprises, ICICI Bank, HDFC Bank, Vedanta, Tata Power Co, State Bank of India, UPL and Indiabulls Housing Finance were some of the most actively traded underlying today. End
Edited by Michael Correya
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Source: Cogencis
