ITC share price: Traders go short on Coal India, Eicher and ITC, add long positions in HUL

The February derivatives series is abuzz with activity as stocks react to the budget announcements and corporate earnings. Traders have added short positions in the futures of select PSU stocks as a hedge while subscribing to the latest tranche of CPSE ETF. ET takes a look at 5 stocks which are gaining momentum in the February derivatives series.

COAL INDIA


CMP (Rs ): 184.95

OI Chg in February Series (%): 113.1

Share Price Change in February series (%): -12.7

Select PSU stocks are the top OI gainers in the February series. The 7th trance of CPSE ETF was launched last month. “These stocks are part of CPSE ETF. There was a 3% ETF discount and to capture that, they apply for the units and go short in top stocks of the basket,” said Amit Gupta, head of derivatives, ICICIdirect. The stock has support at Rs 160 and if it holds that, short covering can take the stock to Rs 220, said Gupta. Analysts said these short positions will see closure towards the end of the series.

NTPC


CMP (Rs ): 115.6

OI Chg in February series (%): 84.7

Share Price Change in February series (%): -3.1

NTPC has also seen addition of short positions as investors shorted the futures and applied in the ETF. Motilal Oswal has maintained ‘buy’ rating on NTPC with a target price of Rs 154 but said risks related to government divestment and uncertainty on value accretion over the potential acquisition of NEEPCO and THDC could be an overhang on the stock in the near term.

EICHER MOTORS


CMP (Rs ): 19,736

OI Chg in February series (%): 15

Share Price Change in February series (%): -6.9

The stock has fallen in the February series tracking weak December quarter results. “…we do not expect a sharp pick-up in volumes over the near term. In the absence of sufficient upsides to current stock price and uncertainty on BS VI platforms, we downgrade to ‘neutral’ from ‘buy’ with TP of Rs 21,800 (Rs 25,600 earlier),” said Citigroup Global Markets in a recent note.

ITC


CMP (Rs ): 213.40

OI Chg in February series (%): 10

Share Price Change in February series (%): -10.5

An increase in indirect taxes on cigarettes in the Union budget on February 1 has dampened sentiment around the stock. Kotak Institutional Equities has lowered the target price on the stock to Rs 300 from Rs 320 and maintained ‘buy’ rating. “ITC’s 3QFY20 (third quarter) print, while decent, wasn’t good enough to lift the muted sentiments on the stock. To add to the pressure, the Union budget raised NCCD on cigarettes substantially – portfolio-level weighted-average increase of around 10% in total tax incidence per stick,” said Kotak Institutional.

HINDUSTAN UNILEVER


CMP (Rs ): 2,159.95

OI Chg in February series (%): 13.3

Share Price Change in February series (%): 12.1

Traders have built long positions in the February futures of Hindustan Unilever after the FMCG major reported better-than-expected result for the December quarter. CIMB Securities has recently upgraded the stock to ‘add’ with a higher target price of Rs 2,313. “Ability to grow ahead of the market and its continued focus on new product launches are encouraging. We believe margins will continue to expand and leverage benefits due to the merger of GSK Consumer will be visible in FY21,” said CIMB Securities.