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Informist, Wednesday, Sep 11, 2024

By Anjana Therese Antony

MUMBAI – More short bets were added in the derivatives chain of Tata Motors on reports that foreign broking firm UBS has a bearish outlook on the automobile maker and following a moderation in sales of the company's Jaguar Land Rover models. The stock has fallen by more than 145 rupees or 13% for nine straight sessions. Today, it closed 5.7% lower at 976.3 rupees on the National Stock Exchange.

Lack of new JLR launches, rising discounts, and moderation in growth could lead to a weak performance in 2025-26 (Apr-Mar), UBS reportedly said. "Extended success of key Jaguar Land Rover models has started to moderate with order book below pre-COVID," it said. The broking firm has retained a 'sell' rating on the stock, with a target price of 825 rupees, which is more than 151 rupees lower than the current level. The foreign broking firm's views come a day after the company reduced prices on its entry-level electric vehicles Tiago, Punch, and Nexon.

Premiums on out-of-the-money put options surged a whopping 400%, while those on call options fell over 70%. The highest addition of open interest was in 1,000-rupee call and 900-rupee put contracts. The futures contract of Tata Motors also mirrored the weakness in the spot market. The September contract closed more than 6% lower. Open interest in the contract rose 16.2% to 98.89 mln.

The sharp fall in shares of Tata Motors in the spot market contributed to a 0.1% fall in the benchmark Nifty 50 which closed 0.5% lower at 24918.45 points. The immediate support for the 50-stock index is pegged at 24800-24750 points and resistance in the range of 25000-25150 points, according to technical and derivatives analysts. 

In the options chain of the Nifty 50, premiums on deep out-of-the-money call contracts of 25000-25700 strikes expiring Thursday fell 56-69% and those on 24900-24700 puts rose 31-102%. The maximum open interest addition was at 25000-point call and 24500-point put.

Foreign investors have increased their short positions in index futures to 36% as of Tuesday from 35% on Monday and 32% on Friday, which shows they have a bearish short-term view on the domestic market. However, analysts believe the medium-term scenario will be better, especially on the back of better corporate earnings, a good monsoon, strong festival demand, and interest rate cuts by major central banks.

--Nifty 50 Sep closed at 24945.00, down 138.00 points; 26.55-point premium to spot index

--Nifty 50 Oct closed at 25077.10, down 135.35 points; 158.65-point premium to spot index

--Nifty 50 Nov closed at 25196.60; down 140.20 points; 278.15-point premium to spot index

Tata Motors, HDFC Bank, ICICI Bank, State Bank of India, Reliance Industries, Bajaj Auto, Dixon Technologies, Bajaj Finance, Axis Bank, Tata Power Co, Oil and Natural Gas Corp, ITC, InterGlobe Aviation, Kotak Mahindra Bank, Asian Paints, and Bharti Airtel were the most-actively traded contracts.  End

Edited by Ashish Shirke

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