Infosys option costs jump as earnings awaited after HCL warning

Mumbai: The cost of Infosys Technologies Ltd equity options jumped to the highest level in 16 months, as investors look ahead to the Indian company’s quarterly earnings next week after its smaller competitor HCL Technologies Ltd issued a sales warning.

At-the-money option costs for Infosys, the nation’s second- most valuable software exporter, jumped to 42.04 as of 12:11 pm in Mumbai, poised for the highest level since May 2014 and a third day of gains. Infosys shares fell 2.2% to Rs.1,155.70 on Tuesday from a record high, and was the biggest drag by points on the 50-stock CNX Nifty Index. HCL, the fourth-largest software services company, declined 0.7% to Rs.853.75.

Infosys will on 12 October kick off S&P BSE Sensex company earnings for the quarter ended 30 September. HCL tumbled 13% on 1 October, the most in six years, after saying its first-quarter revenue growth is “likely to be tepid” because of impact from currency swings and a certain issue related to a client.

“We would be cautious at this level” in Infosys shares after HCL’s warning, Pulakit Parekh, a trader at Mumbai-based brokerage Mehta Vakil and Co., said in a phone interview.

The number of outstanding Infosys options jumped to 14,673 contracts on Tuesday from 13,373 at Monday’s close, with the open interest in call options rising 16% to 8,773. Calls with a strike price of Rs.1,200, and 1,100 puts, had the highest open interest.

The India VIX, the benchmark gauge of demand for protection against stock-market swings, rose 3.2% to 19.73 after four days of declines.

Infosys Technologies Limited