Equity Futures: More gains seen for Nifty 50’s best performer in Apr

Informist, Wednesday, Apr 7, 2021


By Nikhil Patwardhan


MUMBAI – Shares of JSW Steel may gain another 7%, having already risen over 20% so far in April, positioning in the stock's options contracts expiring Apr 29 showed.   


The 600-rupee strike price call option of the stock saw the highest number of positions being added in today's session. The strike also holds the maximum open interest among such contracts. Premium of the contract jumped almost 120%.


In the futures segment, traders added long positions in the April futures contracts of the stock after steel companies raised prices by as much as 5,000 rupees a tn. Open interest in the April futures contract of the stock rose 7.4% to 35.57 mln. 


"After such a sharp rise, you usually see the stock correcting for one or two sessions on profit booking," said Miraj Vora, a technical and derivatives analyst at IDBI Capital Markets. "However, even if it corrects and if it doesn't fall below 500 (rupees), it will definitely go to 600-rupee levels in April." 


In the spot market, the stock has risen for eight straight sessions. The stock ended 4.6% higher today as the Nifty 50's top performer at 562.30 rupees. It hit an all-time high of 566.45 rupees intra-day.


The metal sector has shrugged off the second round of the pandemic blues as most stocks have gained since March, despite rapidly rising COVID-19 cases in the country, which have weighed on the benchmark indices. Investors have bet on rising metal prices across the globe, upbeat demand, and a positive outlook on the sector. 


Besides JSW Steel, investors aggressively bought shares across the board in the spot market today after the Reserve Bank of India retained its accommodative stance and kept growth projections unchanged despite the second wave of COVID-19.


Traders will now await Jan-Mar and annual earnings of companies before taking positions in the derivatives market, analysts said. The earnings season starts next week, with the information technology pack reporting numbers first.


Today, however, traders were cautious in the derivatives segment, ahead of the weekly expiry of the Nifty 50's options contracts on Thursday. Traders added maximum number of positions in the 15100-point strike price call option of the index after it touched a high of 14879.80 points intra-day in the spot market.


The index ended at 14819.05, 135.55 points or 0.9% higher.


Meanwhile, the central bank left the benchmark repo rate unchanged, too, triggering sharp gains in shares of banks. The Nifty Bank index outperformed the Nifty 50 index and closed 1.5% higher at 32991.20 points.


All stocks on the Nifty Bank index ended higher in the range of 0.5-4.5%. Analysts attributed these gains to short covering. "With the recent rise in COVID-19 cases, the economic recovery looks grim, and thus banks may not be preferred buys in the near-term," said a trader.


-–Nifty 50 Apr ended at 14880.50, up 129.05 points; 61.45-point premium to spot

-–Nifty 50 May ended at 14932.45, up 130.70 points; 113.4-point premium to spot

-–Nifty 50 Jun ended at 14949.95, up 133.20 points; 130.9-point premium to spot


Total turnover in the futures and options segment of the National Stock Exchange rose to 43.86 trln rupees from 34.85 trln rupees Tuesday. 


In index options, the turnover was 41.40 trln rupees against 32.56 trln rupees in the previous session. The total premium turnover of the index and stock options was 218.79 bln rupees versus 223.05 bln rupees on Tuesday.


The futures and options contracts of Adani Ports and Special Economic Zone, Adani Enterprises, Reliance Industries, State Bank of India, Tata Steel, Bharti Airtel, JSW Steel, HDFC Bank, ICICI Bank, Bajaj Finance, and Infosys were among the most actively traded. End


Edited by Subham Mitra


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