Equity Futures:Bullish bets in auto cos as chip shortage seen easing

Informist, Tuesday, Nov 16, 2021


By Joe Milton


MUMBAI – Business prospects of automobile companies brightened today as Morgan Stanley said that semiconductor shortages are expected to ease going ahead, which prompted traders to place bullish bets on automobile stocks. 

Shares of Maruti Suzuki India witnessed a breakout with over 8% gains backed by strong volumes. Following this, on expectation of more gains, long positions were added in the November futures of the index. 


The open interest in the contract surged 16.5% to 4.2 mln, while the stock ended 7.3% higher at 8,050.35 rupees in the spot market. Analysts expect the momentum in the stock to continue, and touch 8,350 rupees in the near term.


In the options segment, call writers shifted to higher strike prices as open interest build up was seen across the 8100-9000 rupees strike price. At the same time, call writers unwound their position at the 8000 rupees strike price.


Similarly, long additions were seen in November futures of Mahindra & Mahindra, Eicher Motors, and Tata Motors as the open interest in the contract surged 7-16%. In the cash market, shares of these companies ended 2-4% higher. 


Shares of Hero MotoCorp ended 2.1% higher, as positive sentiment coupled with covering of short positions aided the stock to climb higher. Open interest in November futures of the stock fell 7.7% to 4.1 mln. 


On the other hand, sectoral churn led to persistent selling in financial stocks. Nifty Bank fell 1% and closed at 38307.10 points. 


Open interest in November futures of Nifty Bank surged about 11% to 2.2 mln as prevailing weakness prompted traders to add some short positions. 


In the options segment, maximum open interest in call option segment was at 39000 strike price. For Nifty Bank index 39000 points is the crucial level, and buying can be recommended only if the index crosses this level, said Raj Deepak Singh, head of derivative at ICICI Securities. 


Weighed by financial stocks and Reliance Industries, Nifty 50 index closed 0.6% lower at 17999.20 points. Open interest in November futures were up 3.7% at 10.5 mln. 


In the options segment, call writers were active at 18100 strike price, and maximum addition of open interest was at this strike price. The 50-stock index consolidates at its upper range of 18050-18100 strike price, and Singh recommends buying only when the index surpasses these levels. The analyst favoured buying in Nifty Bank compared to Nifty 50 when they surpass their respective levels mentioned. 


-–Nifty 50 Nov ended at 17987.00, down 154 points; 12.20-point discount to spot index

-–Nifty 50 Dec ended at 18046.00, down 150.75 points; 46.80-point premium to spot index

-–Nifty 50 Jan ended at 18116.35, down 146.75 points; 117.15-point premium to spot index


Total turnover in the futures and options segment of the NSE was about 54 trln rupees today compares with 42.6 trln rupees on Monday. 


The turnover in index options was at 50.1 trln rupees compared with 39.5 trln rupees in the previous session. The total premium turnover of index and stock options today was 243.6 bln rupees compared to 202.5 bln rupees on Monday.


Tata Motors, Maruti Suzuki India, Reliance Industries, Tata Steel, Vedanta Ltd, Tata Power, State Bank of India, Zee Entertainment Enterprises, Infosys, Tata Consultancy Services, and ICICI Bank were some of the most actively traded underlying today. End


Edited by Pranav S. Joshi


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