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Informist, Monday, Oct. 14, 2024

By Anjana Therese Antony

MUMBAI – Ahead of its September quarter earnings Tuesday, traders placed bullish bets in the derivatives chain of HDFC Life Insurance Co in anticipation of on-year growth in key parameters, according to some analysts. Premiums on deep out-of-the-money call options of the insurance company surged and those on puts halved, indicating the positive bias towards the stock, which closed 2.3% higher at INR 740.60 on the National Stock Exchange Monday. The stock has risen nearly 5% in the last seven days and 18.5% in 52 weeks. 

Motilal Oswal Financial Services expects the company's Jul-Sept net profit to grow 11.4% on year to INR 4.2 billion and gross premium income to rise over 25% to INR 187.3 billion. HDFC Life should gain from HDFC Bank's aggressive branch expansion strategy, especially in the lower-tier cities, the broking firm had said in its earnings preview report. In September, the first-year premium income of the third-largest life insurer increased 9.2% on year to INR 26.70 billion, according to data released by the Life Insurance Council on Oct. 11.

In the options chain of the insurer, premiums on INR 740-800 call options expiring Oct. 31 rose 55-70% and those on INR 740-670 put options fell 46-58%. The maximum open interest addition was at INR 740-call and INR 730-put contracts. The futures contract of the company also mirrored the upside in the spot market and open interest in the September series rose 7.7% to 25.17 million. 

The overall equity market is also expected to rise Tuesday, extending gains for the second consecutive session. However, expensive valuations of Indian equities and the expectation of a slowdown in corporate earnings for the September quarter are likely to keep the upside limited in the near term, analysts said. 

Monday, the Nifty 50 and the BSE Sensex closed 0.7% higher each at 25127.95 points and 81973.05 points, respectively. The near-term support for the 50-stock index is pegged at 25100-25000 points and the resistance at 25200-25400 points. 

Premiums on call options close to the spot level rose and those on deep out-of-the-money calls declined, indicating that sharp gains are unlikely in the near term. On the puts side, premiums across options expiring Thursday tumbled over 70%, hinting that a fall is not expected in the coming sessions. Traders also exited some long positions from the Nifty 50's September series and open interest declined 0.1% to 13.80 million. 

--Nifty 50 Oct closed at 25237.65, up 188.10 points; 109.70-point premium to spot index

--Nifty 50 Nov closed at 25368.00, up 178.70 points; 240.05-point premium to spot index

--Nifty 50 Dec closed at 25517.00, up 178.40 points; 389.05-point premium to spot index

HDFC Bank, Reliance Industries, Infosys, Tata Chemicals, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Wipro, HCL Technologies, State Bank of India, Tech Mahindra, Federal Bank, Oberoi Realty, and Tata Consultancy Services were the most-actively traded contracts. End

Edited by Vidhi Verma

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