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Informist, Tuesday, Nov. 5, 2024

By Anjana Therese Antony

MUMBAI – There was an addition of long bets in the derivatives chain of most metal stocks after reports said that the Indian government may hike the anti-dumping duty on steel imports in order to support the domestic industry. This comes as good news for domestic businesses which were impacted by cheaper imports from China, with falling steel exports and rising imports despite high inventory of Indian steel manufacturers in the first half of the current financial year.

Citing sources, ET Now reported that the government may increase the anti-dumping duty on steel to 12% from the current 7.50%. It also said the government will consider tightening quality checks on imported steel and the industry has sought for a 25% safeguard duty, similar to that in the US, the European Union, and Canada. Shares of Indian steel players such as Jindal Steel & Power, Hindalco Industries, Tata Steel, Steel Authority of India, and JSW Steel closed nearly 3-5% higher. 

Investors had also cheered the recent stimulus measures announced by China in an attempt to push its economic growth. The market expects more such measures by the country in the near term, particularly if the property sector's sales data disappoints expectations. The property sector saw a robust recovery in October due to the stimulus measures announced in September. 

Premiums on JSW Steel's INR 1,000-1,080 call options expiring Nov. 28 rose a whopping 139-222% and those on INR 980-900 put options declined around 48%, hinting at the possibility of more rise in the stock price. The maximum open interest addition was at INR 1,070 call and INR 980 put options. Similarly, premiums on out-of-the-money call options of Hindalco, Tata Steel, and SAIL surged and those on put options declined, indicating that these stocks may rise more in the coming sessions. 

The rise in shares of steel companies contributed to an over 0.1% increase in the Nifty 50 index, which closed 0.9% higher at 24213.30 points Tuesday. The near-term support for the index is pegged at 23950-23800 points and resistance at 24300-24400 points. The BSE Sensex ended 0.9% higher at 79476.63 points.

Premiums on the Nifty 50's 24200-24700 call options expiring Thursday increased 27-35% and those on 24200-23500 put options declined 42-54%, indicating the index may see some more upside in the near term. However, analysts do not expect the current optimism to sustain in the near term as the slowdown in earnings growth, uncertainty in the geopolitical tension in West Asia, expensive valuations, and volatility ahead of the outcome of the US presidential election may keep gains under check. 

Benchmark indices, which were choppy during most of the day, rose in the last two hours of trade, primarily led by the gains in index heavyweight HDFC Bank, which surged after reports said MSCI will increase the bank's weightage in the upcoming quarterly rejig. Hence, analysts believe investors' focus will turn back to the near-term fundamentals which "are really not in favour of the bulls". 

--Nifty 50 Nov closed at 24293.65, up 179.00 points; 80.35-point premium to spot index

--Nifty 50 Dec closed at 24445.00, up 181.60 points; 231.70-point premium to spot index

--Nifty 50 Jan closed at 24579.00, up 179.15 points; 365.70-point premium to spot index

HDFC Bank, State Bank of India, ICICI Bank, Reliance Industries, ABB India, Axis Bank, Kotak Mahindra Bank, Bajaj Finance, Mahindra & Mahindra, Bajaj Auto, NMDC, Tata Steel, REC Ltd, Tata Motors, Multi Commodity Exchange, Punjab National Bank, Titan Co., Lupin, and Dixon Technologies India were the most actively traded contracts.  End

Edited by Tanima Banerjee

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