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Informist, Friday, Jul 19, 2024

By Anjana Therese Antony

MUMBAI – Traders placed bearish bets on the options chain of HDFC Bank ahead of a likely weak June quarter earnings, due Saturday. Premiums of deep out-of-the-money puts rose, while those of calls declined, hinting at some caution among traders. Meanwhile, some analysts said a better loan mix is likely to push the bank's margins slightly higher.

The bank is anticipated to report a 4.6% sequential fall in net profit to 157.52 bln rupees for the June quarter due to a decline in gross advances. Its net interest income may rise 1.7% to 295.71 bln rupees, according to the average of estimates of 13 broking firms. This are the fourth quarterly results of the bank after parent Housing Development Finance Corp merged with it.

The Nifty 50 heavyweight's shares closed nearly 8 rupees or 0.5% lower at 1,607.30 rupees on the National Stock Exchange today. The stock ended lower for the fourth straight session. Support for the stock is seen at 1,560 rupees and resistance at 1,650 rupees, a technical and derivatives analyst at a domestic broking firm said.

Premiums of put options in the range of 1,600-1,500 rupees expiring next week increased 53-94% and those of call options in the range of 1,610-1,770 declined 3-11%. The maximum open interest addition was at 1,610-rupee call and 1,500-rupee put. The July futures contract of the stock also followed the fall in the cash market and closed 0.8% lower. Its open interest fell 2.6% to 156.03 mln.

The fall in the index heavyweight contributed to a fall of nearly 0.1% in the Nifty 50, which closed 1.1% lower at 24530.90 points. The near-term support for the index is pegged at 24400 points and resistance at 24700 points.

Today, the Indian equity market saw a correction after hitting a new lifetime high. Analysts said there would be caution ahead of the Union Budget, due on Tuesday, and investors will closely watch whether the government will stick with its policies. While the expensive valuations may limit gains in the stock market in the near term, analysts said the medium-term bias will remain positive on the back of India's economic growth, strong earnings, and a likely slowdown in inflation. 

In the options chain of the index, premiums of 24500-25000 calls declined 40-49%, while those of 24500-23300 puts increased 4-89%. These contracts expire next week. The maximum open interest addition is at 26000-point call and 20150-point put.

The July futures contract of the index also declined, with open interest declining over 4% to 14.4 mln. This contract closed at a discount to the spot market for the first time after being at a premium the past 14 sessions. On Thursday, foreign institutional investors added over 57,000 long positions in index futures and more than 15,000 shorts.

--Nifty 50 Jul closed at 24529.85, down 279.20 points; 1.05-point discount to spot index

--Nifty 50 Aug closed at 24659.90, down 264.25 points; 121.30-point premium to spot index

--Nifty 50 Sep closed at 24795.00, down 249.05 points; 248.40-point premium to spot index

Infosys, HDFC Bank, Reliance Industries, State Bank of India, Tata Consultancy Services, ICICI Bank, Tata Steel, Bharat Electronics, Wipro, UltraTech Cement, ITC, Kotak Mahindra Bank, REC, and Oil and Natural gas Corp were among the most actively traded underlying contracts.  End

Edited by Rajeev Pai

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