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Informist, Monday, Jun. 16, 2025

By Anjana Therese Antony

MUMBAI – Short positions were added to the options chain of automaker Tata Motors after its UK-based subsidiary Jaguar Land Rover reduced its earnings before interest and tax margin guidance for 2025-26 (Apr-Mar) to 5-7% from 10%. The cut in EBIT margin is due to worries about the impact of US tariffs and weakness in the Chinese market. The company also said it expects free cash flow close to zero in the current financial year. Premiums on out-of-the-money put contracts of the company surged, while those on call options tumbled, indicating near-term weakness for the stock.

During the March quarter, the subsidiary's EBIT margin had increased 150 basis points to 10.7%. JLR sales account for around 70% of the parent company's top line. The company said it has faced risks related to semiconductor shortage, aluminium supplier flooding, and UK thefts and insurance.

Following the revision in JLR's margin guidance, shares of Tata Motors fell more than 5% to an over one-month low of INR 672.95 on the National Stock Exchange. Later, they came off lows and closed 4% lower at INR 686.65. The stock was the worst hit among the Nifty 50 constituents. The stock volume jumped over 197% to over 31 million.

Premiums on INR 700-INR 750 call options of Tata Motors expiring on May 26 fell 63-64%, while those on INR 680-INR 620 put strikes increased 117-154%. The maximum open interest addition was at INR 700 call and INR 650 put options. Short positions were also added to the futures series of Tata Motors and open interest in the June contract increased over 15% to 78.02 million. The June series also mirrored the movement in the spot price and closed almost 4% lower at INR 684.75.

Continued uncertainties around US tariffs have been weighing on global financial markets, including India. Investors have been closely watching for trade deals between the US and its key trading partners, particularly China. The fog around tariffs, coupled with foreign outflows and aggravated geopolitical tension between Israel and Iran, and the consequent surge in global crude oil prices has weighed on the near-term sentiment. However, hopes of ceasefire talks between Israel and Iran, likely above-normal monsoon, capital expenditure push from the government, recovery in rural demand, and earnings growth from the second half of the current financial year are expected to support the domestic market.

The Nifty 50 Monday closed 0.9% higher at 24946.50 points and the BSE Sensex ended 0.8% higher at 81796.15 points. The near-term support for the 50-stock index is pegged at 24900-24800 points and resistance at 25000-25050 points. The easing of nervousness in the market was evident from the fear gauge, India VIX, which closed almost 2% lower at 14.8375. 

--Nifty 50 Jun closed at 24998.00, up 270.60 points; 51.50-point premium to the spot index

--Nifty 50 Jul closed at 25119.00, up 262.20 points; 172.50-point premium to the spot index

--Nifty 50 Aug closed at 25226.00, up 256.00 points; 279.50-point premium to the spot index

Tata Motors, ICICI Bank, Bharat Electronics, HDFC Bank, State Bank of India, Bharti Airtel, Infosys, Oil and Natural Gas Corp., Reliance Industries, BSE, Bajaj Finance, Multi Commodity Exchange, Hindustan Aeronautics, InterGlobe Aviation, Tata Consultancy Services, Axis Bank, and Tech Mahindra were the most active underlying stocks Monday.  End

Edited by Ashish Shirke

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