Equity Futures: Strong buying in F&O suggests more gains for oil cos

Equity Futures: Strong buying in F&O suggests more gains for oil cos

Informist, Tuesday, Sep 28, 2021


By Ankika Biswas


MUMBAI – Sharp gains in oil and gas stocks following the surge in Brent Crude Oil and natural gas prices in global markets propelled buying in the derivative segments of the stocks today on hopes of further upmove in this space. 


Investors placed bullish bets in the futures segment of most of these companies, with stocks such as Hindustan Petroleum Corp and Oil and Natural Gas Corp witnessing a 15% and 28% uptick in the open interest of their September futures contracts. Even others like Indian Oil Corp and Bharat Petroleum Corp saw additions of long positions.


Analysts are hopeful of this sector sustaining the upbeat trend seen today. "After a long time, the sector has seen such a strong momentum and this is likely to continue, given the strong build-up of longs in most of the stocks," said an analyst at Axis Securities.


The analyst believes stocks of Oil and Natural Gas Corp and Indian Oil Corp will likely outperform their peers. While shares of ONGC can rise to 148-150 rupees, those of IOC are seen testing 128-130 rupees. The stocks closed 2% and 4% higher at 142.20 rupees and 122.95 rupees, respectively.


In the power segment, which also registered strong gains today, the analyst was bullish on Power Grid Corp of India and Torrent Power as they're likely to sustain the strong gains seen today. He expects Power Grid to test 200-210 rupees, and sees Torrent Power rising to 530-540 rupees in the near term.


While Torrent Power saw a build-up of short positions, Power Grid saw addition of long positions. The stocks ended nearly 2% and 5% up at 503.25 rupees and 183.95 rupees, respectively.


Meanwhile, crude oil prices touching a near three-year high played spoilsport for most domestic equities today as investors booked profits to shift bets towards safe havens such as the US dollar and bonds. However, the headline Nifty 50 managed to close above the 17700-point mark after sliding below 17600 points in early trade.


Analysts said that this has somewhat extinguished fears of a sharp fall in the index as a close below 17700 points could push it to levels such as 17300-17400 points. Today, the headline index closed 0.6% lower at 17748.60 points, after slumping to a low of 17576.10 points during the day.


The sharp fall in the index during the day had paved way for the build-up of short positions, as indicated by the 2.3% uptick in the open interest of the September futures contract. Further, writing at 17700-, 17800- and 17900-strike price call options were seen, pushing the premiums on these contract to fall over 49%.


-–Nifty 50 Sep ended at 17730.50, down 126.25 points; 18.1-point discount to the spot market

-–Nifty 50 Oct ended at 17760.95, down 131.60 points; 12.35-point premium to the spot market

-–Nifty 50 Nov ended at 17805, down 116.65 points; 56.4-point premium to the spot market


Total turnover in the futures and options segment of the NSE was 73.2 trln rupees today, higher than the 41.9 trln rupees on Monday. 


The turnover in the index options was 66.8 trln rupees compared to 36.5 trln rupees in the previous session. The total premium turnover of index and stock options was 343 bln rupees compared with 230.5 bln rupees on Monday. 


Reliance Industries, Bharti Airtel, ICICI Bank, HDFC Bank, Tata Steel, Infosys, Adani Enterprises, Bajaj Finance, State Bank of India and Kotak Mahindra Bank were the other most actively traded stocks today.  End


Edited by Patricia Hou


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