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The Bank Nifty, a gauge of 12 lenders, jumped 2.5% to 18,875.85 at the close, its steepest increase since 28 February. CNX Bank Nifty index puts with a strike price of 18,000 were the most popular bearish contracts at 6.10pm in Mumbai. Hemant Mishra/Mint
The Bank Nifty, a gauge of 12 lenders, jumped 2.5% to 18,875.85 at the close, its steepest increase since 28 February. CNX Bank Nifty index puts with a strike price of 18,000 were the most popular bearish contracts at 6.10pm in Mumbai. Hemant Mishra/Mint

Indian options traders add bearish hedges as bank shares rebound

Indian options traders buy protection against a drop in bank shares as Bank Nifty rose for the first time in 4 days

Mumbai: Indian options traders bought protection against a drop in bank shares as a gauge of lenders rose for the first time in four days, according to Angel Broking Pvt. Ltd and Mehta Vakil and Co.

CNX Bank Nifty index puts with a strike price of 18,000 were the most popular bearish contracts at 6.10pm in Mumbai. The Bank Nifty, a gauge of 12 lenders, jumped 2.5% to 18,875.85 at the close, its steepest increase since 28 February. The benchmark 50-stock CNX Nifty index climbed 0.7%, a fifth straight day of advances, led by Punjab National Bank (PNB).

The Bank Nifty was among the biggest gainers on the National Stock Exchange of India Ltd on Thursday, after it fell for three straight days. Moody’s Investors Service’s downgrade of deposit ratings for India’s three biggest private banks on Thursday hurt investor sentiment, said Pulakit Parekh, a trader at Mumbai-based brokerage Mehta Vakil. Concern that banks’ profits will disappoint also weighed on shares, said Siddarth Bhamre, head of derivatives at Angel Broking.

“Not many are expecting great earnings in the banking space as state-owned banks are likely to disappoint due to high bad loans," Bhamre said in a phone interview in Mumbai on Thursday. “Traders are adding to short positions."

Moody’s cut the local-currency deposit and senior unsecured ratings of ICICI Bank Ltd, HDFC Bank Ltd and Axis Bank Ltd by one level to Baa3/P-3, according to a statement. The outlook on the long-term ratings of the three banks was raised to positive from stable, in line with Moody’s upward revision of the outlook for India’s Baa3 bonds.

Indian companies are scheduled to post results for the January-March quarter from this month, with IndusInd Bank Ltd and Tata Consultancy Services Ltd, the nation’s largest software company, due to report on 16 April. Bloomberg

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