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Informist, Thursday, Jul 18, 2024

By Anjana Therese Antony

MUMBAI – Some out-of-the-money call options of Wipro were bought today ahead of its June quarter earnings due on Friday. While the information technology company's bottomline is seen rising on quarter, its topline is seen steady. Premiums of calls rose over 50%, while those of puts fell around 35% today. There is widespread optimism that the worst is behind for IT players in India and the current financial year is anticipated to be better than the previous one. 

The IT player's consolidated net profit for the quarter is seen rising nearly 5% sequentially to 29.63 bln rupees, according to an average of estimates of 12 broking firms. Consolidated revenue is seen unchanged at 222.09 bln rupees. While the net profit is expected to rise 3% on year, revenue may decline nearly 3%. 

Kotak Institutional Equities expects a 30-basis-point expansion in the company's operating margin to 16.6% and also sees strong deal signings after multiple quarters of disappointment, it said in its earnings preview report. Wipro, along with other IT players in India, had reported weak financial performance for at least a year due to a cut in discretionary spending and unfavourable macroeconomic conditions as well as demand trends.

Today, the stock closed 2.4% higher at 573.20 rupees on the National Stock Exchange. The immediate resistance for the stock is pegged in the range 585-590 rupees, support is at 560 rupees for the near term. 

Coming back to the options chain of the company, premiums of 580-640 strikes rose 58-100%, while those of 570-460 puts declined 11-33%. The maximum open interest addition is at 580-rupee call and 570-rupee put. The July series of the stock also mirrored the gains in the cash market and closed 2.3% higher. Open interest rose 2% to 57.07 mln.

Similarly, upside bets were also placed in the options chain of the benchmark Nifty 50 after the index hit a fresh record high of 24950 points. It closed 0.8% higher at its record closing high of 24800.85 points. Technical and derivatives analysts pegged the next resistance for the index at 25000 for the short term and support in the range of 24700-24600 points. 

Premiums of 24800-25500 calls expiring next week rose 44-53%, while those of 24800-23800 declined 23-31%. The 25500-point call has the maximum open interest addition as well as concentration. The July series of the index closed 0.7% higher at 24810 points and open interest rose 6% to 15.23 mln. On Tuesday, foreign institutional investors exited about 4,500 long positions in index futures and covered over 4,000 shorts.

--Nifty 50 Jul closed at 24810.00, up 165.55 points; 9.15-point premium to spot index

--Nifty 50 Aug closed at 24922.15, up 164.90 points; 121.30-point premium to spot index

--Nifty 50 Sep closed at 25049.25, up 161.40 points; 248.40-point premium to spot index

Hindustan Aeronautics, Infosys, HDFC Bank, Indus Towers, Vodafone Idea, Reliance Industries, Asian Paints, Tata Consultancy Services, State Bank of India, ICICI Bank, and Polycab India were among the most-actively traded contracts.  End

Edited by Vidhi Verma

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