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Informist, Thursday, May 15, 2025

By Anjana Therese Antony

MUMBAI – The options chain of Hero MotorCorp hints at further upside for the stock after various broking firms were positive on the company following its quarterly results. The stock gained the most among Nifty 50 constituents and made its highest single-day gain since June 2024. The stock closed 6.3% higher at INR 4,325 Thursday on the National Stock Exchange after rising almost 7% intra-day. Its market capitalisation rose by INR 51.56 billion to INR 865.07 billion. Premiums on some out-of-the-money call contracts of Hero MotoCorp rose manifold, while those on put strikes declined sharply. 

The highest open interest addition was at INR 4,600 call and INR 4,200 put options. Premiums on INR 4,350-INR 4,600 call options, which are around 1-6% higher than the current market price, increased a whopping 304-366%. Those on INR 4,200-INR 3,800 put options, which are down almost 3-12% from the spot level, declined 68-70%. Traders also added long positions in the futures series of Hero MotoCorp and open interest in the May contract rose almost 8% to 4.76 million. The May contract closed 6% higher at INR 4,320.

Many broking firms retained 'buy' or equivalent rating on the stock and maintained their target prices, supported by expectations of growth in rural demand. Nuvama Institutional Equities, which has a 'neutral' view on the automobile sector, retained the 'buy' rating and target price of INR 5,100. "We reckon rural volume growth shall outpace urban going ahead, on positive customer sentiment (due to increasing crop production and improving terms of trade for farmers) and benign government policies," Nuvama said in its post-earnings report. The company is well-placed to benefit as it has a wide network and a strong presence in the 100–125cc categories, it added. 

The Indian equity market is also likely to rise more in the short term, though periodic corrections are likely as investors would book profits. Benchmark indices recovered and rose sharply in the second half of the session Thursday to hit their highest levels since October 2024. The Nifty 50 closed 1.6% higher at 25062.10 points and the BSE Sensex ended 1.5% higher at 82530.74 points. Analysts said the Nifty 50 has bottomed out around 21800-21700 points it hit in April on mounting worries about tariff risks and fears of further slowdown in domestic earnings growth.

The index might rise to 25800-26000 points and all-time high soon, Nikita Sony, analyst at Money Mantra, said. However, a downside of 500 points is seen in the short term, Sony said. The slowdown in domestic earnings growth seen in the previous few quarters is likely to continue for 2-3 quarters more, Sony said, adding that foreign investors will gradually come to the Indian market as seen in the recent sessions. 

Premiums on 25100-26500 call options expiring next week rose 49-142%, while those on all put contracts below 25050 points tumbled. The highest addition of open interest was at the 26650-point call and the 25000-point put strikes. Traders also added aggressive long bets in the May and June series of the Nifty 50 and open interest in the May contract increased 12% to 13.03 million. 

--Nifty 50 May closed at 25075.00, up 359.10 points; 12.90-point premium to the spot index

--Nifty 50 Jun closed at 25188.90, up 358.00 points; 126.80-point premium to the spot index

--Nifty 50 Jul closed at 25316.00, up 350.60 points; 253.90-point premium to the spot index

Reliance Industries, HDFC Bank, ICICI Bank, Hindustan Aeronautics, Tata Motors, Infosys, State Bank of India, Bharat Electronics, Hero MotoCorp, Bharti Airtel, Eicher Motors, BSE, Muthoot Finance, Axis Bank, Bajaj Finance, LIC Housing Finance, Kotak Mahindra Bank, Larsen & Toubro, Tata Consultancy Services, Lupin, and Tata Power were the most active underlying stocks Thursday.  End

Edited by Saji George Titus

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