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Informist, Monday, Apr. 21, 2025

By Anjana Therese Antony

MUMBAI – Amid increasing worries over US tariffs, Infosys's better-than-expected business outlook drove traders to the derivatives chain of most information technology companies Monday, where they bought out-of-the-money call options. Premiums on call options of most IT companies rose manifold and those on put contracts tumbled, indicating that the near-term bets on these stocks are bullish.

For 2025-26 (Apr-Mar), Infosys guided 0-3% growth in its revenue in constant currency, the lower end of which factors in wage hikes and increasing uncertainty around the impact of US tariffs. There are expectations that the company would make an upward revision to this guidance in the coming quarters if tariff-related worries ease. Though some broking firms reduced their target prices to factor in the potential near-term downside, they retained their "buy" or equivalent rating on the stock for the medium term.

Shares of all five Nifty information technology constituents closed in the green on Monday. Infosys, HCL Technologies, and Tech Mahindra closed 2-5% higher, while Wipro and Tata Consultancy Services ended up 0.7% each. All 10 constituents of the Nifty IT index closed higher as well.

Infosys' comments that it does not expect any major deal ramp downs or closures also boosted sentiment, particularly in an environment where there is no clarity around US President Donald Trump's tariff policies. This echoed views of Tata Consultancy Services. The optimism also comes amid the 90-day pause in tariffs the US had announced, raising hopes that such relaxations would be announced beyond this time period. Though the stock closed higher, some caution is seen in the options chain of Infosys expiring this week as well as in May. Premiums across call as well as put contracts tumbled, hinting at a range-bound movement for the share price.

On the other hand, in the options chain of HCL Technologies, which closed over 3% higher at INR 1,482 on the National Stock Exchange Monday, premiums on INR 1,480-INR 1,520 call options rose 102-111% to INR 16-INR 32, while those on INR 1,480-INR 1,400 put contracts fell 49-64% to INR 7.00-INR 31. The maximum open interest addition was at INR 1,500 call and INR 1,400 put contracts of HCL Technologies.

Similar was the case with Tech Mahindra which closed 5% higher at INR 1,373.50. Premiums on INR 1,380-INR 1,500 call options rose 87-128% and those on INR 1,360-INR 1,300 put strikes fell around 40%. The highest open interest addition was at INR 1,500 call and INR 1,340 put contracts. Premiums on call contracts of Coforge and LTIMindtree also rose, while those on their put strikes declined.

The rise of the five large-cap IT stocks in the Nifty 50 pushed the index 0.2% higher. The Nifty 50 closed 1.2% higher at 24125.55 points and the BSE Sensex ended 1.1% higher at 79408.50 points. Nifty 50 closed higher for the fifth session in a row in the absence of shocks related to US tariffs. "With a large, domestically driven economy and low reliance on exports, especially to the US, Indian markets have been relatively insulated from tariff-related worries," Devarsh Vakil, head of prime research at HDFC Securities, said in a post-market note Monday. Investor sentiment was buoyed by solid earnings reports and positive management commentary from key banks, Vakil said.

--Nifty 50 Apr closed at 24131.30, up 280.00 points; 5.75-point premium to spot index

--Nifty 50 May closed at 24270.00, up 313.60 points; 144.45-point premium to spot index

--Nifty 50 Jun closed at 24372.00, up 311.80 points; 246.45-point premium to spot index

HDFC Bank, ICICI Bank, Reliance Industries, Infosys, Axis Bank, Eternal, Bajaj Finance, Tata Consultancy Services, State Bank of India, Bharti Airtel, Kotak Mahindra Bank, Mahindra & Mahindra, BSE Ltd., IndusInd Bank, Tata Elxsi, and Larsen & Toubro were the most active underlying stocks Monday.  End

Edited by Nishant Maher

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