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Informist, Thursday, Oct. 3, 2024

By Anjana Therese Antony

MUMBAI – Surge in crude oil prices due to heightened geopolitical tension in West Asia prompted traders to place bearish bets in the options chain of Bharat Petroleum Corp Ltd., whose key raw material is crude oil. Premiums on out-of-the-money call options of BPCL halved and those on put contracts more than doubled in anticipation of further rise in crude oil prices, technical and derivatives analysts said. 

There are renewed fears about disruption in supply of crude oil with Iran coming into the picture in the fight between Israel and Hezbollah in Lebanon and Palestinians in Gaza. At 1814 IST, the Brent crude futures were up 1.3% at $75.21 per barrel on the Intercontinental Exchange. Crude oil prices had fallen to a low of $69 per barrel in September after the Organization of the Petroleum Exporting Countries and its allies revised downward their demand outlook for 2024 and 2025.

In the spot market, shares of BPCL closed 5.3% lower at INR 348.85 on the National Stock Exchange Thursday. The stock was the biggest laggard in the Nifty 50 index. In the options chain of the state-owned refining company, premiums on INR 345-280 put options expiring Oct. 31 rose 60-132% and those on INR 355-420 call contracts declined 48%. The maximum open interest addition was at INR 370 call and INR 325 put contracts.

The widening turmoil in West Asia pushed the domestic benchmark indices to their three-week low, and there are worries that if the situation escalates, there will be more outflows from the domestic market. This, coupled with a likely slowdown in earnings growth and expensive stock valuations may drag the market lower, analysts said. 

The Nifty 50 and Sensex Thursday closed 2.1% lower each at 25250.10 points and 82497.10 points, respectively. Support for the 50-stock index is seen at 25100-25000 points in the near term, and resistance at 25400-25500 points. Premiums on 25000-24500 put options of the Nifty 50 expiring Oct. 10 rose 360-570% and those on 25300-26000 call contracts declined 65-83%.

Furthermore, analysts expect the Securities and Exchange Board of India's recent restrictions on exchanges, brokers, and traders on trading in equity index derivatives contracts to have a negative impact on trading volumes. "The impact will be much more in options than futures ... Increase in F&O (futures and options) lot value will also decrease the volumes," Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said. These measures were introduced to increase investor protection and market stability, SEBI said Tuesday.

--Nifty 50 Oct closed at 25478.20, down 491.05 points; 228.10-point premium to spot index

--Nifty 50 Nov closed at 25619.00, down 479.50 points; 368.90-point premium to spot index

--Nifty 50 Dec closed at 25770.00, down 461.00 points; 519.90-point premium to spot index

HDFC Bank, Reliance Industries, ICICI Bank, State Bank of India, Infosys, Axis Bank, Tata Motors, Kotak Mahindra Bank, Mahindra & Mahindra, Larsen & Toubro, Maruti Suzuki India, Tata Steel, Bajaj Finance, and Granules India were among the most-actively traded contracts.  End

US$1=INR 83.96

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

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