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Informist, Tuesday, Mar. 11, 2025

By Alina Geogy

MUMBAI – Traders aggressively added short positions to the futures and options contracts of IndusInd Bank after the bank reported discrepancies in its derivatives portfolio. The bearish bets came along with a sharp 28% decline in the stock price, which marks the stock's steepest single-day decline since its listing in 1998.

Shares of IndusInd Bank fell to INR 649, its lowest level since November 2020, before closing at INR 655.95, down 27.2%, the worst-hit Nifty 50 stock on the day. Premiums nearly halved across most call contracts of the bank expiring this month, with the INR 800 strike having the highest open interest and also the highest addition of open interest. This level indicates a likely strong resistance for the stock. Meanwhile, premiums rose significantly on put contracts.

Market participants turned bearish on the stock after the bank, in an analyst call after market hours Monday, said it had found discrepancies in its derivative portfolio accounts. The bank said these discrepancies were related to internal positions taken to hedge forex deposits or borrowings. The bank estimated a hit of 2.35% on its net worth. As of Dec. 31, IndusInd Bank's net worth was INR 651.02 billion. Therefore, a 2.35% impact would amount to about INR 15.30 billion.

Several brokerages such as Nuvama Institutional Equities, Emkay Global Financial Services, Elara Securities, and Prabhudas Lilladher downgraded the stock's rating and also slashed its target price. The stock will see an overhang in the near to medium term owing to slowdown in loan growth, stress in unsecured loan segments, limited extension of one year given to Managing Director and Chief Executive Officer Sumant Kathpalia, and additional impact from derivatives accounting, Nirmal Bang Institutional Equities said in a report. Following the sharp fall in its stock price, the bank's management asked shareholders to remain calm and not panic, and said the exact impact to its earnings would be confirmed by April, according to media interactions.

Meanwhile, in the overall market, worries about the US economy tipping into a recession grew after comments from US President Donald Trump about a "period of transition, because what we're doing is very big". The comments triggered a sell-off in the US market Monday and also led to selling pressure in the domestic market in early trade Tuesday. The Nifty 50 fell as much as 0.7% to its intraday low, but recovered by the end of the session to close 0.2% up at 22497.90 points.

In the call option contracts of the Nifty 50 expiring this week, the highest open interest addition was at the 22900-point strike price, which could act as an immediate resistance. On the put side, both the highest open interest concentration and the maximum change in open interest were at the 22200-point strike, indicating strong support at this level. The March futures contract of the Nifty 50 closed at 22589.95 points, at a premium of 92.05 points to the spot index. Open interest in this contract rose nearly 1% to 17.83 million, as per provisional data.

--Nifty 50 Mar closed at 22589.95, up 74.30 points
--Nifty 50 Apr closed at 22732.00, up 69.70 points; 234.10-point premium to spot index

--Nifty 50 May closed at 22840.00, up 68.20 points; 342.10-point premium to spot index

IndusInd Bank, ICICI Bank, HDFC Bank, Infosys, Reliance Industries, Zomato, Bajaj Finance, Bharti Airtel, Trent, Dixon Technologies India, Tata Consultancy Services, Bharat Electronics, Mahindra & Mahindra, and Tata Steel were the most active underlying stocks on the National Stock Exchange.  End

Edited by Rajeev Pai

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