Equity Futures
Bajaj Fin deep out-of-the-money puts bought before result Tue
This story was originally published at 21:24 IST on 21 October 2024
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By Anjana Therese Antony
MUMBAI – There were short bets in the derivatives chain of Bajaj Finance Ltd. on caution ahead of the company's earnings, due Tuesday. Premiums on deep out-of-the-money put contracts expiring Oct. 31 rose and those on calls declined, hinting at the caution. The stock closed 1.7% lower at INR 6,780.90 on the National Stock Exchange on Monday. It has fallen nearly 6% in the last seven days and 13% in 52 weeks.
The non-banking financial company is expected to post 30% on-year growth in consolidated net profit to INR 46.08 billion and net interest income is seen rising over 30% to INR 93.92 billion, according to the average of estimates from eight broking firms. Although margins are expected to be under pressure due to higher cost of funds, the rise in bottom line would be supported by the healthy growth in loans, broking firms said in their earnings preview reports.
Premiums on INR 6,800-7,600 call options expiring Oct. 31 declined 17-34% and those on INR 6,800-6,000 put contracts rose 105-205%. The INR 6,800 call as well as put contracts have the highest open interest addition. The October futures contract of Bajaj Finance also mirrored the weakness in the cash market and open interest fell 0.1% to 9.62 million.
The overall stock market is expected to take cues from global markets Tuesday after a choppy session Monday. The domestic market had fallen for three consecutive weeks due to rich valuations, recurring foreign outflows from India to other emerging markets such as China, and anticipation of a slowdown in corporate earnings growth, among others.
The Nifty 50 closed 0.3% lower at 24781.10 points Monday, and the BSE Sensex ended 0.1% lower at 81151.27 points. The near-term support for the 50-stock index is seen at 24600-24500 points and resistance at 24900-25000 points, according to technical and derivatives analysts from two broking firms. The near-term nervousness was also visible in the fear gauge, India VIX, which closed nearly 6% higher at 13.7625.
In the options chain of the Nifty 50, premiums on 24800-25000 call options expiring Thursday declined 57-66% and those on 24800-24400 puts rose 20-67%. The maximum open interest addition was at 25000-point call and 24000-point put contracts. Traders also exited some long positions on the October futures contract of the Nifty 50 and open interest declined 2.7% to 12.90 million.
The increasingly bearish approach of foreign investors towards the domestic market has been weighing the market down for at least four weeks. Monday, they net sold shares worth INR 22.62 billion. However, they are slowly covering some of their short positions in the last few sessions. They covered over 6,000 short positions Friday and added more than 1,000 long positions in index futures, reducing the short positions to 66% from 67% Thursday.
--Nifty 50 Oct closed at 24757.00, down 192.15 points; 24.10-point discount to spot index
--Nifty 50 Nov closed at 24891.00, down 198.55 points; 109.90-point premium to spot index
--Nifty 50 Dec closed at 25052.00, down 188.05 points; 270.90-point premium to spot index
HDFC Bank, Kotak Mahindra Bank, Bajaj Auto, Reliance Industries, ICICI Bank, Tech Mahindra, UltraTech Cement, State Bank of India, Axis Bank, RBL Bank, IndiaMART InterMESH, Bajaj Finance, Infosys, IndusInd Bank, Adani Enterprises, Mahindra & Mahindra, Tata Consumer Products, Polycab India, and Coforge were the most-actively traded contracts. End
Edited by Manisha Baxla
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