Mumbai: Piramal Enterprise share could face greater downside pressure, going by the heavy creation of fresh bearish bets and likely rollover of short positions to its December futures contract.
The November contract, which expires on Thursday, witnessed open interest declining by 42.37 per cent to 14.53 lakh shares from a day ago while the December contract saw OI spiking by 219 per cent to 18.71 lakh shares.Tuesdays crash in Piramal share price was sparked by the sharp fall in Lodha Developers overseas bonds in the past few weeks, said analysts.
PEL, through its subsidiary, Piramal Capital Housing Finance Ltd (PCHFL), has lent to the developer and the market was worried about this.
Lodhas dollar denominated bonds have tanked from $104.13 at end August to around $88.14 at present.Lodha confirmed to ET that its bonds are held to maturity by most investors and hence could be thinly traded, causing a small sale to affect the price adversely.
However, these comments did little to soothe traders, who hammered the PEL stock.
Lodha is not listed.The long unwinding in November and creation of heavy open interest in the next series contract coincided with the cash share falling by more than 6 per cent to Rs 2,040.A rise on OI in the December contract, accompanied by the falling price, indicates the creation of fresh bearish bets.Technical analysts Hormuz Maloo of AFco Investments and Rajesh Palviya of Axis Securities expect the correction to continue.
Maloo said PEL appeared to be forming a triangular pattern on the weekly charts which shows that the stock could probably test its 200-weekly moving average around Rs 1,840.
If it failed to sustain at those levels, it could test its October 26 low of Rs 1,794.9.From Tuesdays close these levels imply possible correction of 10-12 per cent in the short term.
From a 52-week high of Rs 3,307.95 on August 31 the stock has corrected by 38 per cent after the ILFS default spooked the NBFC space and heightened the liquidity pressures on such companies.Piramal Capital Housing Finance Ltd (PCHFL), a whollyowned subsidiary of Piramal Enterprises, provides various financing solutions in the real estate sector such as early stage private equity, structured debt, senior secured debt, construction finance, flexi lease rental discounting and housing finance.The ILFS default, which surfaced in August, spooked investor confidence in companies like PEL and others which have large outstanding loans to property developers, who have been facing sluggish sales for a while now.However, PEL, which has exposure to large realtors such as Lodha, Omkar, etc, through PCHFL, clarified in a recent statement that it has not faced any default from any companies that are part of its lending portfolio.Developers like Lodha, Omkar, Vatika and Embassy are part of our lending portfolio, but they have never defaulted on any interest or repayment obligation to PEL/PCHFL, Piramals statement said last month.Market participants, however, continue to remain jittery about NBFCs, particularly those with exposure to realty developers.
The bearish bets in Piramal Enterprises derivatives are also an indication of this.On Tuesday, the PEL counter witnessed quantity of shares delivered at 32.57 per cent of the total traded quantity.This is higher than 30.69 per cent since August 31, and signifies more selling in the cash market.