Informist, Wednesday, Aug 10, 2022

By Joe Milton

MUMBAI – Shares of Hindalco Industries gained sharply after the company reported its highest-ever quarterly net profit, which triggered bullish bets in the derivatives segment of the stock. 

The company's net profit for Apr-Jun stood at 41.2 bln rupees. Consolidated sales surged 40% year-on-year to 580.2 bln rupees in the reporting quarter. 

Following this, open interest in the August futures of Hindalco Industries surged 15% to 29.2 mln, while the contract gained 4.5%, which indicates the addition of long positions. 

In the cash market, shares of Hindalco Industries ended 4.4% higher at 440.10 rupees. 

In the options segment, call option sellers unwound position across the 400-430 rupees strike prices, while the highest open interest was at the 440 strike price. 

However, considering the sharp gains in the stock, which was accompanied by strong volumes, technical charts indicate the stock could hit 465 rupees in the near term, said Ratnesh Goyal, senior technical and derivative analyst at Arihant Capital Markets. 

In the put options segment of Hindalco Industries, the highest open interest was at the 400-rupee strike price.

Besides Hindalco, bullish bets were placed in the derivatives segment of Tata Chemicals and City Union Bank as these stocks surged following strong earnings fo the June quarter. 

Open interest in August futures of Tata Chemicals and City Union Bank jumped about 50% and 35%, respectively. 

Shares of Tata Chemicals decisively surpassed the 1,000-rupee level, which prompted call writers to unwind their position at this strike price. 

The highest open interest in the put options segment of Tata Chemicals was at the 1,000-rupee strike price, which indicates immediate support for the stock at this level.

Shares of Tata Chemicals ended 12.2% higher at 1,074.15 rupees, while those of City Union Bank closed at 176.70 rupees, up 8.5%. 

Overall, the Nifty 50 index remained choppy for most of the day and closed 0.1% higher at 17534.75 points. The index briefly crossed 17550 points in early trade, but failed to sustain at higher levels. 

Caution among investors ahead of data on retail inflation in the US later today prompted them to avoid aggressive bets in the derivatives segment. Open interest in the August futures of the Nifty 50 rose merely 1% to 10.9 mln. 

In the options series of the Nifty 50 expiring on Thursday, significant addition of open interest was seen across 17600-17800 strike prices. Analysts expect the headline index to face stiff resistance at 17600 points.

A higher-than-expected retail inflation print in the US might trigger a sell-off, in which case analysts expect the index to find support at 17400 points. 

--Nifty 50 Aug closed at 17551.75, down 6 points; 17-point premium to spot index

--Nifty 50 Sep closed at 17618.25, down 2.15 points; 83.50-point premium to spot index

--Nifty 50 Oct closed at 17658.45, down 3.90 points; 123.70-point premium to spot index

The total turnover in the futures and options segment of the National Stock Exchange was about 110 trln rupees compared to 88.4 trln rupees on Monday.    

The turnover in index options was 106.7 trln rupees compared to 85.3 trln rupees on Monday. The total premium turnover of the index and stock options was 383.7 bln rupees compared to 387.2 bln rupees in the previous session. 

Tata Chemicals, ICICI Bank, Bajaj Finance, HDFC Bank, Hindalco Industries, Reliance Industries, Bharti Airtel, Adani Enterprises, Tata Motors, and State Bank of India were among the most actively traded underlying stocks.  End

Edited by Avishek Dutta

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