Informist, Monday, Mar 28, 2022

By Vaibhavi

MUMBAI – The news of a merger between PVR Ltd and INOX Leisure Ltd stole the spotlight today, which lifted shares of PVR 10% during the day. This prompted traders to aggressively add bullish bets in the stock's derivatives segment.

However, profit booking and a weak market weighed on the stock, pulling it off highs. Even though persistent profit booking cannot be ruled out, analysts expect the upward momentum in the stock to continue.

With re-rating for the merged entity on the cards, analysts at ICICI Securities believe the key synergy of both companies will be their bargaining power in costs and a superior market share.

Today, traders were actively buying out-of-the-money call options of PVR across 1,900-2,000-rupee strike prices as premiums on these contracts rose sharply on hopes of the stock testing these levels.

Bullish bets were also seen in the futures segment as open interest of the stock's March futures contract jumped over 16%, indicating a spurt in long positions.

Even if some profit booking was to prevail in the next session, the stock is expected to draw support from 1,800-rupee level, said Chandan Taparia, technical and derivatives analyst at Motilal Oswal Financial Services.

Among put options, 1,800-rupee out-of-the-money strike prices witnessed maximum addition of open interest.

Today, the scrip ended 3.4% higher at 1,883.30 rupees, after hitting an over two-year high of 2,003.80 rupees earlier in the day.

Strong derivatives action was also seen in the Nifty Bank as gains in select banks helped the sectoral index recover after falling over 1% intraday. 

Recovery for the sectoral index came on the back of short covering as well addition of some long positions on hopes of the index regaining upward momentum as open interest for its March futures contract rose 4%.

Sneha Seth, technical and derivatives analyst at Angel One expects the positive bias for Nifty Bank to continue with the index moving towards 36000 points. A sustenance above that level could also propel the sectoral index towards 36800 points.

Today, the Nifty Bank index closed 0.9% higher at 35710.50 points. 

Meanwhile, the Nifty 50 recovered all of its early losses to end higher as gains in banks, automobile and metal companies offset losses in information technology and pharmaceutical companies.

This helped the index to close above 17200 points after falling to around 17000 points earlier in the day.

Today, the Nifty 50 ended at 17222 points, up 0.4% after hitting a low of 17003.90 intraday.

Analysts expect the positive bias for the Nifty 50 to continue as long as it stays above its key support zone of 17000 points. This positive sentiment was also witnessed in the options segment as out-of-the-money put options of 17000-strike price witnessed significant open interest addition.

Moreover, open interest in the March futures contract of Nifty 50 rose nearly 7% to 10.5 mln.

--Nifty 50 Mar ended at 17276.35, up 82.30 points; 54.35-point premium to spot index

--Nifty 50 Apr ended at 17316.00, up 74.95 points; 94.00-point premium to spot index

--Nifty 50 May ended at 17352.00, up 69.25 points; 130.00-point premium to spot index

The total turnover in the futures and options segment of the NSE was 58.61 trln rupees, higher than 41.2 trln rupees on Friday.

The turnover in index options was about 53.85 trln rupees, higher than 37.22 trln rupees in the previous session. The total premium turnover of index and stock options was 367.2 bln rupees compared with 316.52 bln rupees on Friday.
 
The most actively traded underlying stocks were ICICI Bank, HDFC Bank, Reliance Industries, Bharti Airtel, Adani Enterprises, Jindal Steel and Power, State Bank of India, Kotak Mahindra Bank, Housing Development Finance Corp and Tata Motors.  End

Edited by Aditya Sakorkar

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