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Informist, Monday, Oct. 28, 2024

By Anjana Therese Antony

MUMBAI – Traders bought out-of-the-money put options of Maruti Suzuki India and also exited some long positions amid slight caution ahead of a likely-muted earnings growth for the September quarter, due Tuesday. Premiums on puts surged and those on calls fell marginally. The automobile manufacturer is likely to post muted earnings due to a marginal fall in wholesale volumes and higher discounts, broking firms said in their earnings preview reports. 

The stock closed 0.2% lower at INR 11,483.25 on the National Stock Exchange, extending losses for the third straight session. As per the options data, resistance is placed around at INR 11,900-12,050 levels, while support is placed around INR 11,000-10,900 levels, technical and derivatives analysts at two broking firms said. 

Premiums on INR 11,400-14,200 call options expiring Thursday declined 9-40% and those on INR 11,400-10,600 put options rose 40-102%. The maximum open interest addition was at INR 11,800 call and INR 11,100 put contracts expiring this week. Traders also exited long positions from the October series of Maruti Suzuki and open interest declined 2.7% to 3.31 million. 

India's largest passenger vehicle manufacturer is expected to post a 2.5% on-year growth in its net profit to INR 38.09 billion for the September quarter and revenue is seen rising only 0.4% to INR 372.15 billion, according to the average of estimates from 12 broking firms. On a sequential basis, Maruti Suzuki is expected to report mid-single digit growth in percentage terms across key earnings parameters. Motilal Oswal Financial Services expects the company's operating margin to contract 40 basis points sequentially to 12.3% due to higher discounts. The company's post-earnings virtual press conference is scheduled at 1430 IST Tuesday.

Of the 17 research reports on Maruti Suzuki available with Informist, 13 broking firms have a 'buy' rating on the stock, three have a 'hold' rating and the remaining one has a 'sell' rating. Emkay Global Financial Services has the lowest target price of INR 12,000 as per its research report in August and Nuvama Institutional Equities has the highest target price of INR 16,000 as per its report in July. 

Though the overall domestic equities rose after five straight sessions of fall, analysts do not expect the stock market to continue its upward journey in the short term as they believe there aren't enough positive cues to lure investors. Foreign investors were pulling money out of the domestic market for five straight weeks, which have weighed on investors' sentiment. This, coupled with slower-than-expected results and downgrades in earnings estimates for some mid-cap and large-cap companies are also expected to pull the market lower in the coming sessions, analysts said. 

The Nifty 50 closed 0.7% higher at 24339.15 points and the BSE Sensex ended 0.8% higher at 80005.04 points Monday. The near-term support for the 50-stock index remains at 24000 points and resistance at 24450-25500 points. Premiums across Nifty 50 put options nearly halved and those on out-of-the-money call options close to the spot level rose marginally. Traders also unwinded long positions from the October series and open interest declined a whopping 15.4% to 10.15 million. 

--Nifty 50 Oct closed at 24364.00, up 171.25 points; 24.85-point premium to spot index

--Nifty 50 Nov closed at 24502.00, up 168.70 points; 162.85-point premium to spot index

--Nifty 50 Dec closed at 24658.90, up 169.10 points; 319.75-point premium to spot index

HDFC Bank, ICICI Bank, Reliance Industries, InterGlobe Aviation, Bharti Airtel, State Bank of India, IndusInd Bank, Infosys, Punjab National Bank, Axis Bank, Kotak Mahindra Bank, Bharat Heavy Electricals, Bank of Baroda, Tata Motors, Mahindra & Mahindra, DLF, and Coal India were the most actively traded contracts.  End

Edited by Tanima Banerjee

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