RIL May gap down 3-4% at open
₹2,555. RIL was the most active stock on the F&O counter on Friday prior to the release of the results. A rise in open interest accompanied by a falling price indicates bearish sentiment being created.
Another pointer of heightened volatility on the counter is the massive covering of positions at the ₹2,600 active strike by bullish put sellers. When put sellers buy the puts sold earlier to close out their positions, it adds to the downward momentum. Added to this is the selling of in-the-money active calls at ₹2,540-2,560 which shows that bearish calls as writers are confident that the stock will not rise or will fall, enabling them to pocket the premiums (price) paid by the call buyers.
A call seller is bearish while a call buyer is bullish. A put seller is bullish while a put buyer is bearish. These actions played out before the results were released as if the traders anticipated a Q1 that missed analyst estimates.
The overhang of the poor O2C performance will thus weigh on the stock in the near term. Reliance Industries Ltd said on Friday that its quarterly profit declined 5.9% from a year earlier, missing analysts’ estimates, due to the weak performance of its chemicals and refining business. Net profit fell to ₹18,258 crore in the three months ended 30 June from ₹19,405 crore in the year-ago quarter.
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