Informist, Friday, Jun 3, 2022
By Ankika Biswas
MUMBAI – Bearish bets flooded the derivatives segment of UltraTech Cement today, as the stock slipped 7% intraday after the company's mega capacity expansion plan triggered concerns of a demand-supply mismatch in the sector, threatening profitability.
While further selling pressure may persist, a sharp decline hereon is less likely, said an analyst at Axis Securities, who sees strong support at the 5,600-rupee mark. The scrip had slipped to a 16-month low of 5,610 rupees, before closing 5% lower at 5,678.85 rupees.
He recommended traders with short positions to continue holding those, while advising long positions only when the scrip breaches 5,800 rupees.
The over 22% rise in open interest of the June futures contract suggested aggressive bearish bets. Meanwhile, premiums on the 5,500- and 5,600-rupee strike price put options more than trebled amid a weak bias.
In fact, the bearish sentiment among traders was also seen in parent Grasim Industries, that fell nearly 7% and was the worst hit on the Nifty 50 list. Open interest of the June futures contract rose over 14%, suggesting a build up of short positions.
The analyst expects further correction, as a breach of the 1,300-rupee mark may see it fall further to 1,200-1,250 rupees. Hence, he advises investors to avoid long positions at current levels. Today, it closed over 6% lower at 1,339.45 rupees.
In fact, a strong build up of short positions was seen across stocks in the sector--Shree Cement, Dalmia Bharat, India Cements and The Ramco Cements.
Meanwhile, the headline Nifty 50 erased its upmove and closed in the red today, ending the week with just 1% gains, as investors refrained from taking aggressive bets in the run up to the RBI's monetary policy meeting early next week.
The Nifty 50 is seen consolidating within the band of 16400-16800 points. Backing this view was the 16800-strike price call option holding the highest open interest addition, and the 16400 put option witnessing strong open interest build up.
Breaching the lower end may see the index testing 16200-16300 points, whereas managing to surpass the upper end may pull the index to 17000-17200, technical charts showed.
Today, it closed 0.3% lower at 16584.30 points, after rising to 16793.85 points earlier. Open interest of the June futures contract was down over 1%.
--Nifty 50 Jun closed at 16601.00, down 20.20 points; 16.70-point premium to spot index
--Nifty 50 Jul closed at 16624.95, down 11.20 points; 40.65-point premium to spot index
--Nifty 50 Aug closed at 16653.40, down 16.85 points; 69.10-point premium to spot index
The total turnover in the futures and options segment of the National Stock Exchange was 52.93 trln rupees, much lower than 203.37 trln rupees on the day of weekly options expiry.
The turnover in index options was 50.27 trln rupees, compared with 201.21 trln rupees in the previous session. The total premium turnover of index and stock options was 348.65 bln rupees, lower than 426.89 bln rupees on Thursday.
The most-actively traded underlying stocks were Reliance Industries, HDFC Bank, UltraTech Cement, Infosys, ICICI Bank, Bajaj Finance, Adani Enterprises, Axis Bank, Tata Consultancy Services, and Grasim Industries. End
Edited by Michael Correya
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