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Informist, Wednesday, Nov. 6, 2024

By Anjana Therese Antony

MUMBAI – Traders were undecided about Mahindra & Mahindra's stock price movement Thursday ahead of the company releasing its quarterly results, which analysts expect to be muted. Premiums on deep out-of-the-money calls and puts of M&M expiring Nov. 28 declined, indicating indecision. The stock closed 1.2% higher at INR 2,934.55 Wednesday on the National Stock Exchange, up for the fifth consecutive session. It has gained 8.4% in this period.

The company's net profit is seen rising by only 1% on year to INR 34.85 billion and revenue is expected to grow 6% to INR 272.18 billion, according to the average of estimates from eight broking firms. The muted performance may come despite growth in overall wholesale volumes, higher average selling price, and moderation in steel prices, the broking firms said in their preview reports.

Premiums on INR 2,950-3,600 call options of M&M declined 8-48% and those on INR 2,950-2,400 put options fell 21-47%. The highest addition of open interest was at INR 3,200 call and INR 2,700 put options. The futures contract of the company also closed higher and open interest rose 0.3% to 23.86 million. The support for the stock is pegged at INR 2,700-2,650 and resistance is seen at INR 3,100-3,200 for the short term, a technical and derivatives analyst at a domestic broking firm said.

Coming to the overall domestic market, the benchmark Nifty 50 and BSE Sensex each closed 1.1% higher at 24484.05 points and 80378.13 points, respectively, up for the second straight session. The surge came after election data from the US suggested that Republican candidate Donald Trump, the eventual winner, was on course to become president again, leading to aggressive short covering in the domestic derivatives market.

The near-term support for the 50-stock index is pegged at 24300-24250 points and resistance at 24500-24600 points, analysts said. Going ahead, a closing above 24500 points will open the doors for the index to climb to the 25000 level in the near term, a few analysts said.

In the options chain of the Nifty 50, premiums on call options close to the spot level, that is, 24500-24700 strikes, rose 40-71%, while those on the remaining out-of-the-money contracts declined, indicating that a sharp upside is not seen ahead of the weekly expiry of these contracts Thursday. On the puts side, premiums across contracts fell more than 80%. The maximum addition of open interest was at the 25000-point call and 24000-point put options. 

However, analysts do not expect the current optimism to be sustained in the near term. They said the continuous selling by foreign investors, expensive valuations, and poor corporate earnings growth are hurting the near-term sentiment of investors. On Tuesday, foreign investors' share of short positions in index futures declined to 73% from 76% Monday. They added more than 13,800 long positions and over 3,800 short positions.

--Nifty 50 Nov closed at 24592.00, up 296.55 points; 107.95-point premium to spot index

--Nifty 50 Dec closed at 24748.90, up 309.05 points; 264.85-point premium to spot index

--Nifty 50 Jan closed at 24890.00, up 307.95 points; 405.95-point premium to spot index

Dixon Technologies India, HDFC Bank, Reliance Industries, State Bank of India, ICICI Bank, Titan Co., Infosys, Trent, Tata Consultancy Services, Tata Steel, Mahindra & Mahindra, Adani Enterprises, Axis Bank, Kotak Mahindra Bank, Wipro, GAIL (India), Hindalco Industries, and Tata Motors were the most actively traded contracts.  End

Edited by Rajeev Pai

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