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Informist, Thursday, Oct. 17, 2024

By Anjana Therese Antony

MUMBAI – After shares of India's second-largest tea retailer Tata Consumer Products fell to an over three-month low, traders placed downside bets in the derivatives segment. The company is scheduled to release its quarterly results on Friday, and is expected to post muted growth in key parameters. The stock ended 2.3% lower at INR 1,088.50 on the National Stock Exchange. It has fallen 2.3% in the last seven days but is up 21% in 52 weeks. 

The Kolkata-based company's Jul-Sept consolidated net profit is seen increasing only 0.6% on year to INR 3.4 billion and revenue may rise 16.5% to INR 43.5 billion, according to the average of the estimates of eight brokerages. This would be due to a decline in tea sales volumes and monsoon floods affecting demand, broking firms said in their earnings preview reports. Despite measures like new product launches tailored for specific regions, Tata Consumer's tea business has been feeling some heat from regional players. 

Premiums on INR 1,080-1,110 call options expiring Oct. 31 fell 29-44% and those on INR 1,080-1,000 puts rose 67.95%. The maximum open interest addition was at the INR 1,110 call and INR 1,080 put contracts. The October futures contract of Tata Consumer also closed lower and open interest was up 0.3% at 12.99 million. 

The overall equity market also saw a correction Thursday amid expensive valuations and anticipation of a slowdown in quarterly earnings. The Nifty 50 closed 0.9% lower at 24749.85 points and the BSE Sensex ended 0.6% lower at 81006.61 points. 

Near-term support for the 50-stock index is seen at 24500 points and resistance at 24900-25000 points. "Traders are aggressively writing call options (of Nifty 50). In such situations, there tends to be some bounce and one must utilise that bounce to create fresh short positions," Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market, said. 

Premiums on 24800-25000 call options of the Nifty 50 expiring next week fell 45-56% and those on 24800-23050 put contracts rose 32-89%. The maximum open interest addition was at the 24950-call and 24550-point put options. The October series of the index closed lower and open interest rose 0.7% to 13.81 million. "FIIs started cutting long positions (in index futures) on Oct 1. On Oct 7, FIIs turn net short on index futures, and currently they are net short with 168104 index futures contracts," Kumar of Globe Capital said. 

--Nifty 50 Oct closed at 24845.10, down 203.70 points; 92.25-point premium to spot index

--Nifty 50 Nov closed at 24985.00, down 211.00 points; 235.15-point premium to spot index

--Nifty 50 Dec closed at 25135.00, down 204.90 points; 385.15-point premium to spot index

Bajaj Auto, Infosys, Reliance Industries, HDFC Bank, State Bank of India, Havells India, Axis Bank, Mphasis, Hero MotoCorp, Mahindra & Mahindra, ICICI Bank, Tata Motors, and Tech Mahindra were the most-actively traded contracts.  End

Edited by Avishek Dutta

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