See Muthootfin sep futures are trading at a discount of 20/-.
Don’t see any dividend announced or is it in the anticipation that dividend will be announced this month or any other reason?
Purchased Muthootfin sep future around 2 weeks back and that time it’s trading at a premium. Thinking if would have purchased aug futures that time and then carry forward to sep future near the aug expiry, would have been better.
But as these actions are unpredicted, any suggestions when purchasing futures that need to be watched like always purchase current month futures when the idea is to carry forward them for few months?
I’ve been wondering the same thing. It’s true that muthootfin usually declares a dividend only once a year, after its Q4 earnings.
It’s recent business performance has been poor and maybe the market expects the price to go further down but since 75% is held with the promoters, the liquidity isn’t there to be able to sell your holdings without a significant price damage.
In such cases, large investors want to hedge their holdings by shorting futures, and i think that partly explains the discount.
Coming to your question, i think it’s always better to get into the near month futures.
It’s more liquid, plus any corporate actions announced usually have their ex dates a few weeks later, by when the contract rolls over and you have more clarity.
Might be that case. As see this discount is not constant and it’s very volatile like sometimes the discount is 10/- and then goes to 20/-. Looks need to wait for sometime to stabilise. Ideally in case of dividend, this discount will be consistent.
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Now it’s going crazy. That Muthootfin oct fut closed at 942/- where as MUTHOOTFIN stock closed at 1002/- (a difference of 60 rupees almost 6%). Are there any instances earlier of this much difference between futures and stocks?
Yes, the market is in total backwardation. I can’t figure out the reason behind it.
Not sure of the reason but MUTHOOTFIN next month futures are always trading at a discount of around 10/- most of the time for last 1 year. Are there any instances of other stocks where futures traded consistently at a discount?