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Informist, Monday, Sep 9, 2024

By Anjana Therese Antony

MUMBAI – Bulls turned more active in the derivatives chain of fast-moving consumer goods companies on expectations of a robust festive season and recovery in rural demand, analysts said. While valuations in the sector remain expensive, analysts said strong earnings growth and a good monsoon are keeping these stocks in the spotlight with the market counting on the likely strong financial performance of these companies.

Today, Hindustan Unilever, Britannia Industries, ITC, and Tata Consumer Products all closed 1.6-2.9% higher, together contributing to a rise of nearly 0.2% in the benchmark Nifty 50. The Nifty FMCG was the top sectoral gainer, closing 2% higher at 64465.85 points, with most constituents recording gains. 

Premiums on out-of-the-money calls expiring Sep 26 surged for these four stocks, while those on puts tumbled. For HUL, premiums on 2,920-3,120 strikes rose over 100%, while those on 2,920-2,780 strikes halved. The stock closed almost 3% higher at 2,921.80 rupees on the National Stock Exchange and was the top gainer in the Nifty 50.

Similarly, premiums on out-of-the-money call options of Britannia Industries and ITC rose 40-50% and those on call options of Tata Consumer Products increased around 30%. Meanwhile, premiums on puts declined 20-40%.

FMCG stocks had underperformed for at least a year owing to last year's weak monsoon and sales volume. The sector grabbed investors' attention recently on signs of demand recovery as well as on the government's boost to improve rural economic growth.

Coming to the overall market, analysts said they expect Indian equities to move higher, but at a slower pace, till the outcome of the US Federal Reserve's monetary policy outcome on Sep 18. While market participants anticipate the Fed cutting interest rates this time, there is uncertainty about the quantum of reduction, especially with some of the recent weak US economic data creating worries about an economic slowdown in the world's largest economy.

While intermittent corrections in the Indian stock market are likely, a sharp fall is not anticipated, analysts said, owing to the country's strong growth prospects. Today, the Nifty 50 closed 0.3% higher at 24936.40 points and the BSE Sensex ended 0.5% higher at 81559.54 points. The support for the 50-stock index for Tuesday is seen at 24850-24900 points and resistance at 25000-21500 points, according to technical and derivatives analysts at three broking firms. 

In the options chain of the Nifty 50, premiums on out-of-the-money calls as well as puts declined over 40%. However, the September futures contract of the index closed at a premium to the spot market and open interest rose 0.5% to 14.34 mln. Foreign investors increased their short positions in index futures to 35% on Friday from 32% on Wednesday. They exited over 36,000 long positions in index futures on Friday and added more than 10,000 short positions.  

--Nifty 50 Sep closed at 24993.30, up 87.30 points; 56.90-point premium to spot index

--Nifty 50 Oct closed at 25123.50, up 80.00 points; 187.10-point premium to spot index

--Nifty 50 Nov closed at 25249.00; up 85.15 points; 312.60-point premium to spot index

State Bank of India, HDFC Bank, ICICI Bank, Reliance Industries, Axis Bank, Vodafone Idea, Hindustan Aeronautics, Power Finance Corp, REC, Hindustan Unilever, Kotak Mahindra Bank, Infosys, Tata Motors, and Oil & Natural Gas Corp were the most-actively traded contracts.  End

Edited by Rajeev Pai

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