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Informist, Thursday, Oct. 24, 2024

By Anjana Therese Antony

MUMBAI – Downside bets were placed in the options chain of Bharat Petroleum Corp. ahead of likely-weak September quarter results on Friday. Weak refining margins have been affecting the financial performance of Indian oil refining companies in the last few quarters. Premiums on out-of-the-money call options of BPCL rose and those on puts declined, hinting at a fall in the stock price Friday. The stock was choppy Thursday and closed 0.5% lower at INR 321.45 on the National Stock Exchange.

Premiums on INR 325-335 call options of BPCL expiring next week declined 21-28% and those on INR 320-300 put contracts increased 8-14%. The maximum open interest addition was at INR 325 call and INR 320 put contracts. Traders also exited some long positions from the October futures contract of BPCL and open interest declined 1.3% to 74.13 million. The contract closed 0.6% lower at INR 321.10.

The oil marketing company's net profit for the September quarter is seen falling 55.5% on year to INR 37.87 billion and revenue is seen nearly 4% higher at INR 1.07 trillion, according to the average of estimates from 11 brokerage firms. "We expect (oil marketing) companies to report lower GRMs (gross refining margins) on weaker core and inventory losses while marketing adventitious losses to add to the weakness, offsetting strong gross margins," YES Securities said in its earnings preview report. The company's peer Hindustan Petroleum Corp. is also scheduled to release its quarterly earnings Friday and may post a similar result like BPCL.

The overall market is also expected to extend losses for the fifth consecutive session and end lower for the fourth straight week. Slowdown in corporate earnings growth, downgrades in earnings estimates and stock rating of some large-cap and mid-cap companies, recurring foreign outflows, and expensive valuations have been dragging the market lower recently. Analysts and fund managers said that the returns from the domestic equity market will be much less than how it was 2-3 years ago. "FIIs will wait for major positive triggers to buy in our market. Till then, muted movement is expected in the short term," an analyst at a domestic broking firm said.

On Thursday, the benchmark Nifty 50 closed 0.2% lower at 24399.40 points and the Sensex was down nearly 17 points at 80065.16 points. The near-term support for the Nifty 50 is seen at 24100-24000 points and the resistance at 24500-24600 points. Analysts said the index is unlikely to cross this resistance in the coming sessions. 

Premiums across call and put options of the Nifty 50 plunged Thursday, declining 20-60%. The highest open interest addition was at 24500-point call and 22250-point put contracts. Some long positions were exited from the October futures of the index and open interest fell 0.7% to 12.81 million.

--Nifty 50 Oct closed at 24474.00, down 8.65 points; 74.60-point premium to spot index

--Nifty 50 Nov closed at 24615.00, down 4.55 points; 215.60-point premium to spot index

--Nifty 50 Dec closed at 24765.00, down 8.55 points; 365.60-point premium to spot index

HDFC Bank, Reliance Industries, Hindustan Unilever, ICICI Bank, Dixon Technologies India, Hindalco Industries, State Bank of India, Coforge, Colgate Palmolive India, TVS Motor Co., IDFC First Bank, Punjab National Bank, REC, Tata Motors, Bajaj Auto, and IndusInd Bank were the most-actively traded contracts.  End

Edited by Ashish Shirke

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