Equity Futures:Tata group cos call option premiums jump as shrs soar

Informist, Wednesday, Oct 13, 2021


By Vivek Kumar


MUMBAI- Premiums on the call option of several Tata group companies shot up significantly today as the stocks witnessed sharp gains and broke several resistance levels in the cash market.


One can term this as a beginning of a new trend for many of these Tata Group companies, a derivatives analyst with a domestic brokerage firm said.


The call option premiums of 480 rupees and 475 rupees strike prices of Tata Motors jumped a whopping six times today as the stock cruised past those levels and hit a 55-month high of 523.85 rupees in the cash market. 


The gains came following the 75-bln-rupee investment by TPG Rise Climate in the company's electric vehicle subsidiary. The news had a spillover effect on other Tata group companies, too, as it provided a sentimental boost.


Major call option premiums of Tata Power more than trebled in value today, while those of Tata Chemicals zoomed 7-9 times.


The premiums of 220-rupee call option of Tata Power jumped to 17.55 rupees today from 4.6 rupees on Tuesday. Tata Chemicals' 1,150 rupees call option premium jumped to 47 rupees today from just 5.35 rupees on Tuesday.


The higher strike price call options were not available today for these stocks as such sharp gains were not expected. However, they are likely to be available from Thursday, analysts said.


The overall trend in these stocks continues to be positive as the gains today were supported by significantly high volumes, indicating a good buying interest, said Ruchit Jain, a senior analyst – technical and derivatives, AngelOne.


Shares of Tata Motors closed with over 20% gains at 506.90 rupees and volumes on the counter stood at 197.9 mln shares, over five times higher than the six-month average daily volume of 39.1 mln shares.


The open interest in the stock's October futures, too, jumped over 16%, indicating an aggressive build-up of long positions. 


The trend was similar in Tata Power and Tata Chemicals. Both the stocks closed over 14% higher with significantly high volumes and open interest in their October futures contracts rising around 5% and 11%, respectively.


The gains in Tata group's companies supported the Nifty 50 today as the index hit new milestones. 


The premium of 18400 points call option rose 20% today and the contract witnessed maximum addition of open interest. In the put options, 18100-points strike price witnessed its premiums tumbling 80%.


The index closed 0.9% higher at 18161.75 points in the cash market today after hitting a lifetime high of 18197.80 points. Investors believe that it is likely to touch 18200 points on Thursday as the call option's premium surged 200% today.


-–Nifty 50 Oct ended at 18178.00, up 175.45 points; 16.25-point premium to spot index

-–Nifty 50 Nov ended at 18206.10, up 176.00 points; 44.35-point premium to spot index

-–Nifty 50 Dec ended at 18259.95, up 188.20 points; 98.20-point premium to spot index


Total turnover in the futures and options segment of NSE was 59.26 trln rupees today, compared with 52.73 trln rupees on Tuesday.  


The turnover in index options was about 54.19 trln rupees compared with 48.84 trln rupees in the previous session. The total premium turnover of index and stock options was 299.20 bln rupees compared with 267.55 bln rupees Tuesday.


Tata Motors, Tata Power, Tata Steel, Tata Chemicals, ITC, Infosys, Adani Enterprises, Zee Entertainment Enterprises, Bharat Heavy Electricals, Reliance Industries, Mahindra & Mahindra, State Bank of India, Titan, and Adani Ports and Special Economic Zone were the other most actively traded stocks today.  End


Edited by Akul Nishant Akhoury



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