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Informist, Monday, Dec. 2, 2024

By Apoorva Choubey

MUMBAI – Traders added long positions in the December futures of most cement stocks, and bought their call options across strikes, as the outlook for the sector improved after a few analysts, including Jefferies India, expressed the view that these companies would see a revival in growth from Oct-Mar. The bullish positioning suggests that gains in these stocks could be sustained in the coming sessions, according to analysts. 

Open interest in the December futures of UltraTech Cement increased 5% to 2.7 million, while that in ACC's current month futures rose 1.6% to 3.63 million. The number of open positions in Shree Cement were up 2.6% at 318,800, while that in Ambuja Cement rose 0.3% to 37.4 million. J.K. Cement saw a 25% jump in open interest to 865,000. Shares of UltraTech Cement, J.K. Cement, ACC, Ambuja Cement, and Shree Cement gained 0.5-5% in the cash market.

Call options of Ambuja Cements and UltraTech were aggressively bought, especially in out-of-the-money strikes, indicating that the momentum could be sustained, experts said. Their put options were sold across strikes, in line with the bullish view. In ACC, J.K. Cement, and Shree Cement's options too, similar trends were seen.

Jefferies is expecting cement prices to recover, amid an improving demand environment. Demand growth moderately improved in Oct-Nov, and the recovery should continue into Jan-Mar, backed by a revival in capital expenditure by the government, the brokerage reportedly said. It expects 8-10% volume growth for cement companies in Oct-Mar, compared with a flat performance in Apr-Sept.

Apart from cement stocks' futures, some financial, real-estate, and automobile companies' futures also saw bullish positions being added in futures and options. Dixon Technologies India was also favoured by call buyers and bulls after its wholly-owned subsidiary Padget Electronics Friday said it plans to commence production of Google Pixel smartphones.

Positioning in overall index futures indicates caution, analysts believe, with some volatility being expected in the coming days. Foreign investors remain net short on index futures while high networth and retail investors have cut long bets. 

The Indian rupee fell to a record low amid concerns over a sluggish economy, as India's GDP growth slumped to a seven-quarter low of 5.4% in Jul-Sep, Siddhartha Khemka, head of research, wealth management, Motilal Oswal Financial Services, said. Additionally, US President-elect Donald Trump threatened to impose 100% tariff on BRICS countries, including India, if they undermine the dollar or try to replace it with another currency for international transactions. "Given the volatile global economic environment and mixed domestic factors, we expect the market to consolidate within a broad range in the near term," he said. 

Open interest in the December futures of the Nifty 50 jumped nearly 6% to over 12 million. The spot index closed at 24276.05 points, up 144.95 points or 0.6%. India VIX, also known as the "fear gauge" in market parlance, rose 2% to 14.7000.      

While worries over corporate growth slowdown, gains in the dollar, global trade uncertainties, and high inflation remain, several experts have noted that Indian equities may still fare better than their emerging market and Asian peers, led by robust domestic inflows, a fast-growing consumer-driven economy, and the capability to seize market share in several manufacturing sectors from countries like China, said an analyst at a local brokerage. However, some volatility may be expected in the near term, with the Reserve Bank of India's bi-monthly policy review scheduled this week, as well as more news emerging about policy changes that Trump wants to implement after coming to power, he said. 

Traders bought call options of the Nifty 50's December series across the monthly and weekly expiries. The 24300 and 24400 strike price call options were among the most actively bought across all series, and saw premiums surge, indicating that they are seen as key levels. 

The Nifty 50 is facing resistance near the 24350-24360 zone, which if breached decisively, could take the index to 24550 points, analysts said. On the downside, the index will find support near 23870 points, they said.

--Nifty 50 Dec closed at 24429.00, up 124.85 points; 152.95-point premium to spot index

--Nifty 50 Jan closed at 24583.00, up 117.60 points; 306.95-point premium to spot index

--Nifty 50 Feb closed at 24720.00, up 123.60 points; 443.95-point premium to spot index 

Dixon Technologies India, Reliance Industries, HDFC Bank, ICICI Bank, State Bank of India, Bajaj Finance, Adani Green Energy, UltraTech Cement, RBL Bank, Tata Motors, Bharti Airtel, Mahindra & Mahindra, DLF, and Infosys were the most actively traded contracts.  End

Edited by Rajeev Pai

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