Equity Futures:Auto cos bought as BJP seen addressing rural distress

Friday, May 24


By Apoorva Choubey 


MUMBAI –  Hopes that the Bharatiya Janata Party-led National Democratic Alliance would soon come up with steps to boost farm incomes triggered buying in the May futures of automobile companies that cater to rural India. 


The equity market is optimistic that the BJP will deliver on populist promises that were part of its manifesto, such as doubling farm incomes. 


Open interest in the May futures of Mahindra & Mahindra, TVS Motor Co, Tata Motors, Escorts, Eicher Motors, Ashok Leyland and Hero MotoCorp rose 1-6%, while these stocks ended 2-5% higher in the cash market. 


The buying in commercial vehicle manufacturers was also because of reports that the new government might announce a scrappage policy for inefficient commercial vehicles in the coming Budget, which is seen boosting demand.


Among others, Sun TV Network's May futures were sold after disappointing earnings and concerns over loss of market share in Tamil Nadu. The stock closed 3% lower in the cash market while open interest in the contract jumped 18%. 


Hopes of steps to boost liquidity and spur economic growth also spurred long positions in the May futures of several banks and the Nifty Bank index. 


Traders sold out-of-the-money call and put options of the Nifty 50, indicating that they see the index's movement to be limited. 


The most active strikes were the 12000 call option and the 11700 put options, which would be the band in which traders expect the index to move in the near term. 


Sharp gains this week and global uncertainties may cap gains in the market because of optimism over the BJP's win, analysts said. 


Open interest in the May futures of the index jumped 6% to 18.3 mln as long positions were added. The contract provisionally ended at a premium of 21.15 points to the spot index. 


The Nifty 50 ended at 11844.10, up 187.05 points or 1.6% from the previous close. 


–Nifty 50 May ended at 11865.25, up 172.85 points

–Nifty 50 Jun ended at 11908.00, up 178.45 points; 63.90-point premium to spot

–Nifty 50 Jul ended at 11933.40, up 165.20 points; 89.30-point premium to spot


Total turnover in the futures and options segment of the National Stock Exchange fell to 9.81 trln rupees from 25.81 trln rupees on Thursday.


In the options segment, the turnover fell to 8.18 trln rupees from 23.59 trln rupees in the previous session, while the total premium turnover of index and stock options fell to 44.37 bln rupees from 83.40 bln rupees in the previous session.


Futures and options contracts of State Bank of India, Reliance Industries, ICICI Bank, Maruti Suzuki India, HDFC Bank, Axis Bank, Tata Steel, IndusInd Bank, YES Bank, Tata Motors, Larsen & Toubro, Bank of Baroda, Housing Development Finance Corp, and Bajaj Finance were among the most actively traded today.  End


Edited by Avishek Dutta


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