Bears trim short positions in SBI as sell-off seen excessive
Derivatives traders are softening their bearish stance on SBI, which has been dragged down in recent weeks on worries.
By Nihar Gokhale, ET Bureau |
MUMBAI: Derivatives traders are softening their bearish stance on the State Bank of India (SBI), which has been dragged down in recent weeks on worries about the rise in bad loans.
Traders trimmed some of their short positions in SBI stock futures on Monday as they felt the recent sell-off has been excessive. “SBI futures were oversold till recently. Short-covering has pulled it up,” said Amit Gupta, head – derivatives, ICICI Direct. “Some long initiation may have also begun,” he said.
SBI shares gained 5% to close at Rs 1,775.5, reducing the discount to their futures to around Rs 8. Analysts said traders mostly carried forward bearish bets in the SBI futures December contracts when the November series expired on Thursday.
“All banking stock futures have seen a positive build-up. SBI stock had been beaten down and Rs 1,650 looked like a good buying opportunity,” said Monal Desai VP & head-–Inst equities (derivatives) at brokerage Prabhudas Lilladher.
Provisional data indicated a 1.5% increase in long positions, he said. “While the operational performance has shown good recovery, the asset quality has consistently been deteriorating and remains an overhang on earnings. We believe the bank’s business growth will be impacted by rising slippages and capital constraints which, in turn, may impact the earnings growth,” said Sharekhan in a report. Analysts don’t rule out a rise in SBI to Rs 1,850 to Rs 1,900 in a month, but they recommend trimming exposure at that level. “The outlook for SBI is bleak both fundamentally and technically. We have a target of Rs 1,400 for SBI before March,” said AK Prabhakar, senior VP, Anand Rathi .
Traders trimmed some of their short positions in SBI stock futures on Monday as they felt the recent sell-off has been excessive. “SBI futures were oversold till recently. Short-covering has pulled it up,” said Amit Gupta, head – derivatives, ICICI Direct. “Some long initiation may have also begun,” he said.
SBI shares gained 5% to close at Rs 1,775.5, reducing the discount to their futures to around Rs 8. Analysts said traders mostly carried forward bearish bets in the SBI futures December contracts when the November series expired on Thursday.
“All banking stock futures have seen a positive build-up. SBI stock had been beaten down and Rs 1,650 looked like a good buying opportunity,” said Monal Desai VP & head-–Inst equities (derivatives) at brokerage Prabhudas Lilladher.
Provisional data indicated a 1.5% increase in long positions, he said. “While the operational performance has shown good recovery, the asset quality has consistently been deteriorating and remains an overhang on earnings. We believe the bank’s business growth will be impacted by rising slippages and capital constraints which, in turn, may impact the earnings growth,” said Sharekhan in a report. Analysts don’t rule out a rise in SBI to Rs 1,850 to Rs 1,900 in a month, but they recommend trimming exposure at that level. “The outlook for SBI is bleak both fundamentally and technically. We have a target of Rs 1,400 for SBI before March,” said AK Prabhakar, senior VP, Anand Rathi .
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