Indian equity-options traders increased protection against a decline in bank shares as lenders rose for a second straight day.
The number of put options on the CNX Bank Nifty Index, a gauge of lenders, climbed to 0.85 per call at 3:49 p.m. in Mumbai, the highest level since April 15. The Bank Nifty advanced 0.3 percent to 18,302.65. ICICI Bank Ltd., India’s largest private lender, increased 1 percent to 330.15 rupees. The CNX Nifty index declined 0.6 percent to 8,239.75.
ICICI Bank’s Chief Executive Officer Chanda Kochhar said on Monday that the year ended March 31 was probably the company’s worst for bad loans and that loan growth will improve in the current year. While the comments spurred the lender’s shares and the Bank Nifty index, a derivatives analyst at Motilal Oswal Financial Services Ltd. is advising against holding banks for more than a day.
“Once again, the set up is short in Bank Nifty,” Bhavin Desai, the Motilal Oswal analyst in Mumbai, told Bloomberg TV India. “I won’t be too excited to buy the index or any of its constituents unless there is evidence of fresh longs.”
The Bank Nifty trades at 13.9 times its projected 12-month earnings, compared with a five-year average of 13.6 times. The 50-stock Nifty index is valued at 15.5 times.
The India VIX Index, a gauge of protection against stock market swings using options, fell 1 percent to 17.24 after rising as much as 2.7 percent earlier on Wednesday.