Equity Futures: Earnings momentum keeps F&O bets stock-specific

Informist, Tuesday, Nov 2, 2021


By Ankika Biswas


MUMBAI – With the earnings momentum in full swing, investors remained focused on stock-specific approach. Among major Nifty 50 stocks that saw good price movements, investors bought the November futures contract of Sun Pharmaceutical Industries and pushed the open interest in the contract nearly 14% higher today.


While the stock had risen 3% during the day on robust Jul-Sep earnings, it erased most of the gains and closed only 0.4% higher at 815.40 rupees due to profit booking. While long positions in the futures remained undeterred, traders were seen selling the out-of-the-money call options across 820-900-rupee strike prices, which saw their premiums fall 7-25%.


Strong volumes suggest that the stock of Sun Pharma is likely to rise further, said an analyst at a domestic brokerage firm. However, given that the uptrend in the stock fizzled out soon, only a sustenance above the 800-point mark going forward would help it extend gains towards 860-880 rupees, he added.


Bullish bets were also seen in the derivatives segment of State Bank of India, tracking the stock's gains in the spot market ahead of its Jul-Sep earnings on Wednesday. The near 7% uptick in open interest of the November futures contract suggested the build-up of long positions.


While the stock is seen retaining its upward momentum and testing 540-545 rupees, it may also slump to 500 rupees on disappointing numbers, the analyst added. 


Today, the shares of SBI closed over 1% higher at 521.70 rupees.


While the Nifty 50 was on track to recovery in early trade, it gave up the gains upon touching the 18000-point mark. Further, some caution ahead of the outcome of the monetary policy meeting of the US Federal Reserve also weighed on the headline index.


Today, the Nifty 50 closed 0.2% lower at 17888.95 points, after having touched an intra-day high of 18012.25 points. The 2.4% fall in open interest of the November futures contract indicated unwinding of long positions.


Further, traders also sold the out-of-the-money call options across 18000-18200 strike prices of the Nifty 50, resulting in a 69-82% slump in their premiums.


Analysts expect the index to remain rangebound on Wednesday as investors may lighten their positions ahead of a long weekend and the outcome of the Fed's policy meeting, which starts later today. Further, some volatility is also seen as weekly index options expire on Wednesday, with the Diwali holiday beginning from Thursday. 


-–Nifty 50 Nov ended at 17922.95, down 85.50 points; 34-point premium to spot index

-–Nifty 50 Dec ended at 17983, down 85.50 points; 94.05-point premium to spot index

-–Nifty 50 Jan ended at 18039, down 79.75 points; 150.05-point premium to spot index


Total turnover in the futures and options segment of the NSE was at 72.5 trln rupees today, higher than the 55.64 trln rupees on Monday. 


The turnover in index options was at 69.7 trln rupees compared with 52.63 trln rupees in the previous session. The total premium turnover of index and stock options was 281.59 bln rupees, a tad lower than the 281.70 bln rupees on Monday.


Tata Motors, Sun Pharmaceutical Industries, Tata Power, SBI, Reliance Industries, Tata Steel, Maruti Suzuki India and ICICI Bank were the other most-actively traded underlyings today. End


Edited by Mainak Moitra


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