Informist, Friday, Jul 21, 2023

By Anjana Therese Antony

MUMBAI – Bearishness took shape in the options chain of Infosys after the company unexpectedly slashed its sales growth guidance for the current financial year. The information technology major cut its revenue growth guidance to 1.0-3.5% from 4-7% for 2023-24 (Apr-Mar). The guidance revision came amid continued pressure in revenue and weakness in discretionary spending in the sector. 

On the put side, the premium of strike prices below 1,330 rupees expiring on Jul 27 rose, and new positions were added. Some analysts said that this hints at the likely downside for the stock. The premium at this level rose by 11.25 rupees to 14.40 rupees. Strike prices 1,320-1,300 rupees also saw nearly 1.0-2.6 mln open interest additions.

With the sentiment being dampened towards the stock, traders sold call options at and above 1,330 rupees strike price. The premium at this level declined by 101.10 rupees to 21.45 rupees. Open interest increased by about 522,000 to over 409,000. 

Strike prices in the range of 1,340-1,450 rupees of call contracts also saw selling pressure. Premium in this range fell around 90% to 15.50-3.15 rupees. The highest interest addition of 2.9 mln was observed at 1,400 rupees strike price. 

Meanwhile, the company reported a 3% sequential decline in its consolidated net profit for the June quarter to 59.45 bln rupees, lower than the expected 61.75 bln rupees. Revenue rose by 1.3% from the previous quarter to 379.33 bln rupees, which also beat analysts' average estimate of 377 bln rupees. 

Today, the stock closed 8% lower at 1,331.60 rupees on the National Stock Exchange. For the near term, the immediate support for the stock is seen at 1,290-1,280 rupees and resistance at 1,370 rupees. 

Following the unexpected announcement of Infosys, IT stocks tumbled and primarily pulled the market down today. IT stocks contributed to 0.6% losses in Nifty 50. With losses in major stocks in the sector, Nifty IT plunged significantly and closed 4% lower to become the worst performer among sectoral indices.

With shares of IT companies dragging the markets, Nifty 50 and Sensex closed 1% lower each at 19745.00 points and 66684.26 points. The 50-stock index breached the crucial 19900 level. Analysts had expected the index to surpass its new psychologically important level of 20000 points. 

The support for Nifty 50 is now pegged at 19650 points and resistance at 19800 points for Monday. 

As per provisional data, open interest in the July futures contract of the Nifty 50 declined by 2.8% to 10.45 mln.

--Nifty 50 Jul closed at 19860.00, down 163.65 points; 61.55-point discount to spot index

--Nifty 50 Aug closed at 19924.95, down 143.60 points; 179.95-point premium to spot index

--Nifty 50 Sep closed at 20038.00, down 135.15 points; 293.00-point premium to spot index

Infosys, HDFC Bank, Reliance Industries, State Bank of India, Ashok Leyland, ICICI Bank, JSW Steel, Tata Consultancy Services, Kotak Mahindra Bank, UltraTech Cement, and Larsen & Toubro were among the most-actively traded underlying stocks. End

Edited by Manisha Baxla

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