Informist, Friday, Jul 22, 2022

By Ankika Biswas

MUMBAI – Strong bullish bets in UltraTech Cement, following its higher-than-expected Apr-Jun earnings, have prompted analysts to believe that the stock has the potential to edge higher and test 6,800 rupees going ahead.

Rising nearly 6% to a one-month high to 6,495 rupees intraday, shares of UltraTech Cement topped the Nifty 50's gainers list today. 

The near 22% rise in open interest in the July futures contract reflected strong long positions. Further, premiums across 6,500- to 6,800-rupee strike price call options skyrocketed six- to seven-fold, indicating traders' confidence that the stock may test these levels.

Despite surging 13% in six days, analysts see scope for further gains in the stock, as today's upmove was accompanied by strong trade volumes and bullish bets. 

However, in case of profit booking, the stock is seen drawing a strong support at 6,200 rupees, going by the highest open interest addition at that strike price put option.

Analysts recommended using any fall towards 6,350-6,400 rupees as a buying opportunity. Today, the stock closed over 5% higher at 6,458.70 rupees.

In fact, a strong upmove was seen in the entire cement pack today, buoyed by UltraTech Cement's earnings that triggered bullish bets and covering of short positions in quite a few of them. 

Among major ones, strong formation of long positions was seen in the derivatives counter of parent Grasim Industries and India Cements.

As for the headline index, the Nifty 50 rose for the sixth straight day and closed at its highest level in over two months today. Resuming its weekly uptrend, it has risen over 4% this week.

Analysts pointed at an increasing scope for the index to test 17000 points next week, if frontline banks continue to support. However, some profit booking may trickle in given that the index is in an overbought zone currently, which may take it to 16550 points. 

The 17000-strike price call option held the highest open interest concentration, suggesting a resistance zone at that level. Traders were also active at the out-of-the-money 16800-strike price call option.

Among the major triggers for early next week are the quarterly earnings by Reliance Industries, the country's most valuable company, and other Nifty 50 companies and the July meeting of the US Federal Reserve.

Today, the 50-stock index closed 0.7% higher at 16719.45 points, while open interest of the July futures contract was down over 2%.

--Nifty 50 Jul closed at 16722.50, up 125 points; 3.05-point premium to spot index

--Nifty 50 Aug closed at 16730.40, up 123.30 points; 10.95-point premium to spot index

--Nifty 50 Sep closed at 16770.00, up 121.85 points; 50.55-point premium to spot index

The total turnover in the futures and options segment of the National Stock Exchange was about 64.84 trln rupees, much lower than 234.93 trln rupees on the day of the weekly options contracts expiry.

The turnover in index options was 60.27 trln rupees, as against 231.09 trln rupees on Thursday. The total premium turnover of index and stock options was at 356.84 bln rupees compared with 430.59 bln rupees on Thursday.  

HDFC Bank, Reliance Industries, ICICI Bank, Infosys, Adani Enterprises, UltraTech Cement, Axis Bank, Kotak Mahindra Bank, Tata Consultancy Services, and State Bank of India were the most actively traded underlying stocks.  End

Edited by Akul Nishant Akhoury

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