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Informist, Wednesday, Oct. 16, 2024

By Anjana Therese Antony

MUMBAI – Though information technology major Infosys is widely expected to post strong earnings Thursday and raise its revenue growth guidance for 2024-25 (Apr-Mar), some caution Wednesday led to the stock close in the red. Shares of Infosys, along with other IT players, declined amid expensive valuations and weakness in their US counterparts. Premiums on deep out-of-the-money call options expiring Oct. 31 declined over 30% and those on put contracts surged.

The Bengaluru-based company's consolidated net profit for Jul-Sept is seen rising 7% sequentially to INR 68.13 billion and revenue may grow 3.4% to INR 408.38 billion, according to the average of estimates from 17 broking firms. This would be much better than the growth posted by Tata Consultancy Services and HCL Technologies. The company is also widely expected to raise its revenue growth guidance for FY25 to 4-5% from 3-4% earlier. IT companies in India felt the heat of high interest rates in the US, reduction in discretionary spending by their clients across segments, and a muted demand environment for more than a year. 

The stock closed 2% lower at INR 1,920.10 on the National Stock Exchange Wednesday. Premiums on INR 1,920-2,020 call options tumbled 35-38% and those on INR 1,920-1,800 puts increased 45-59%. The highest open interest addition was at INR 1,940 call and INR 1,920 put options. 

The domestic stock market is also expected to remain weak Thursday, extending the fall for the third straight session. Stretched valuation of the market, coupled with the anticipation of a slowdown in earnings growth in the September quarter, has been limiting the gains of Indian equities in the short term. There are also expectations that returns from the Indian market will be lower this year compared to the last two-three years. 

Wednesday, the Nifty 50 closed 0.3% lower at 24971.30 points and the BSE Sensex ended 0.4% down at 81501.36 points. The near-term support for the Nifty 50 is seen at 24950-24900 points and resistance at 25150-25200 points, according to technical and derivatives analysts at two broking firms. 

In the options chain of the 50-stock index, premiums on 25000-26000 call options expiring Thursday fell around 57% and those on 24500-24200 put options expiring next week rose 3-13%. The maximum open interest addition is at 25500-point call and 24800-point put options. The October futures contract of the Nifty 50 expiring Oct. 31 also fell, and open interest rose 2.1% to 13.89 million. 

Foreign investors have been increasing their short positions in index futures at least for a month. Tuesday, they added more than 2,800 short positions and exited over 4,600 long positions. They have 65% short positions in index futures Tuesday. 

--Nifty 50 Oct closed at 25032.60, down 85.75 points; 61.30-point premium to spot index

--Nifty 50 Nov closed at 25175.00, down 90.55 points; 203.70-point premium to spot index

--Nifty 50 Dec closed at 25330.00, down 90.75 points; 358.70-point premium to spot index

Reliance Industries, HDFC Bank, ICICI Bank, HDFC Asset Management Co., Infosys, Hindustan Aeronautics, Kotak Mahindra Bank, Axis Bank, Voltas, Polycab India, Trent, Bajaj Auto, Tata Motors, State Bank of India, Siemens, Coforge, Mahindra & Mahindra, Hindustan Petroleum Corp., Bajaj Finance, and ABB India were the most-actively traded contracts.  End

Edited by Vidhi Verma

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