F&O Check: Shorts rise at Adani counters; AEL may hit Rs 2,600 level

Adani Enterprises, Adani Ports, ACC and Ambuja Cements witnessed significant build-up of OI in tandem with a fall in stock price so far this week, indicating build-up of shorts at these counters.

Shares of Adani Group companies witnessed a heavy sell-off in the last two trading sessions, after US-based research firm Hindenburg accused the Group of stock manipulation and accounting fraud.

The Hindenburg report stated that its two-year investigation revealed that Adani Group was "engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades". READ MORE

Interestingly, the four Group stocks listed in the F&O (Futures & Options) segment - Adani Enterprises, Adani Ports, ACC and Ambuja Cement witnessed build-up of Open Interest (OI) on the short-side since beginning of this week, i.e. couple of days prior to the day Hindenburg report news break.

In general, a fall in stock price accompanied with rise in OI indicates build-up of short positions in the F&O segment.

F&O Watch

Adani Enterprises (AEL): In the first three trading sessions of the week, the stock witnessed a 2 per cent fall, with its Open Interest (OI) rising by as much 71.3 per cent partly due to the rollover of positions to February series.

Today, the stock has tanked as much as 15 per cent to Rs 2,900-odd level, on addition of another 8.5 per cent to OI. 

The option chain shows highest OI in Calls at 4,000 Strike Price followed by 3,600, 3,400 levels. On Friday, heavy call writing was witnessed at 3,200 and 3,300 Calls. Thus, indicating that the up move may be capped around Rs 3,350 to Rs 3,400 range for the February series.

On the other hand, the highest OI in Puts is seen at 2,800 Strike Price. The total OI stands at 4,300-odd contracts, with almost 3,200 contracts added in trades on Friday. Significant OI is also seen at 3,000 and 3,200 Puts. Based on the current OI and Premium data, Adani Enterprises can expect support in the range of Rs 2,550 to Rs 2,600.

Adani Ports & SEZ: As of Wednesday, the stock had declined 6.3 per cent, with a near 100 per cent rise in Open Interest (OI) this week. On Friday, so far, the counter added another 7.6 per cent contracts to the OI, while the stock price crashed over 17 per cent.

The option chain data indicates existence of strong resistance for the stock at Rs 700, with the second-highest OI in Calls at the same Strike Price. The highest OI among Calls is at 800 Strike Price. Fresh writing of Calls is seen at Rs 650 and Rs 680 levels.

On the other hand, the highest OI in Puts is seen at Rs 600 Strike Price, and a notable build-up of positions at the Rs 620 Strike Price. This indicates a likelihood of a pullback to above Rs 620 level for the stock in the February series.

ACC: Prior to Friday's free-fall, ACC had dipped 7.3 per cent with a huge 453 per cent rise in OI this week. Today, the OI had risen by an additional 18 per cent indicating aggressive shorts at lower levels too.

ACC is not so active in the options segment. Highest OI in Calls is seen at Rs 2,200 and Rs 2,400 Strike Prices, with fresh Call writing seen at Rs 2,000 and Rs 2,100 Strikes.

Contrary bets seem to be placed at Rs 1,900 Put, which is where the highest OI stands.

Ambuja Cements: Similar to ACC, shares of Ambuja Cements had declined up to 7.7 per cent in the first three trading sessions of this week. The OI too saw significant jump of 385 per cent.

On Friday, the OI rose by another 9.5 per cent as the stock hit the 20 per cent lower limit. 

Among Calls, the highest OI is seen at Rs 500 Strike Price. In the near money Strikes, Call writing is visible at Rs 420, Rs 440 and Rs 450 Strikes, suggesting likely resistance at these levels. 

On the other hand, there is a significant OI at Rs 400 and Rs 460 Puts, while the latter has seen some unwinding; the Rs 400 Put has seen fresh additions. Thus, it seems likely that the stock may look to bounce back above the Rs 400-mark in the near term.