More Stories

Informist, Friday, Nov. 8, 2024

By Anjana Therese Antony

MUMBAI – Ahead of the September quarter earnings of Asian Paints Ltd., due Saturday, traders placed downside bets in the company's options chain. Premiums on deep out-of-the-money call options of the company expiring Nov. 28 declined and those on put options increased, indicating a further slide in the stock price in the near term. Expensive valuation and rising competition in the paints industry are expected to bring the stock price lower in the short-to-medium term, an analyst tracking the sector said. The company is expected to report muted results for Jul-Sept.

The stock, which rose for seven consecutive months till September and gained nearly 18%, fell 12% in October and extended the fall to November, too. On Friday, it closed 2.6% lower at INR 2,769.45 on the National Stock Exchange, down for the second straight session.

Premiums on INR 2,800-3,000 call options declined 49-56% while those on INR 2,700-2,440 put contracts increased 69-94%. The maximum open interest addition was at INR 2,800 call and INR 2,700 put contracts. The futures contracts of Asian Paints also closed lower, with open interest in the November series rising 8.5% to 12.83 million.

The September quarter is likely to have been a tough time for the paint maker owing to the extended monsoon season and the consequent impact on retail demand for premium decorative paints, broking firms said in their earnings preview reports. The company's consolidated net profit for the quarter is seen nearly 9% down on year at INR 10.99 billion, though revenue is expected to rise over 2% to INR 86.63 billion.

During the post-earnings call with analysts Saturday, investors will track the management's comments on demand from metro cities and tier-II and tier-III towns, the outlook on raw materials, margins, pricing actions, and competitive intensity, broking firms said.

In the overall market, analysts expect the indices to move in a small range next week, particularly in the absence of major events in the domestic and international markets. With some major global central banks having made their monetary policy decisions and the September quarter corporate earnings season in India ending next week, investors will probably turn their focus to trends in global markets for cues, analysts said. The near-term growth of the market is also expected to be muted as valuations remain expensive in almost all sectors bar banking and financial services, they said.

On Friday, the Nifty 50 closed 0.2% lower at 24148.20 points and the Sensex ended marginally lower at 79486.32 points. Both benchmark indices closed down for the second successive trading session. The near-term support for the 50-stock index is pegged at 23900-24000 points and resistance at 24300-24400 points, according to technical and derivatives analysts at two domestic broking firms.

In the options segment of the Nifty 50, premiums on 24200-24700 call options expiring next week declined 40-69% and those on 24200-24100 puts rose 5-10%. The highest addition of open interest was at 25000-point call and 22250-point put options. 

Analysts anticipate more foreign outflows in the near term, especially to the US and China. With Donald Trump winning the US presidential election, there are views that his policies could boost the financial performance of companies in the US and attract investments. October saw the highest-ever foreign fund outflows of nearly $10 billion from India. Foreign institutional investors have been adding continuously to their short positions in index futures since last month, so much so that 75% of their positions in the market today are short, compared to 35% in early September.

--Nifty 50 Nov closed at 24196.40, down 104.10 points; 48.20-point premium to spot index

--Nifty 50 Dec closed at 24351.90, down 99.30 points; 203.70-point premium to spot index

--Nifty 50 Jan closed at 24510.05, down 98.45 points; 361.85-point premium to spot index

State Bank of India, Reliance Industries, HDFC Bank, ICICI Bank, The Indian Hotels Co., Mahindra & Mahindra, Cummins India, Tata Motors, Lupin, Page Industries, Trent, Ashok Leyland, Tata Steel, Vedanta, Dixon Technologies (India), Asian Paints, and Hindalco Industries were the most actively traded contracts.  End

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.