SPOT - FUTURE 3% Discount in BATA INDIA

mohan.sic

Well-Known Member
#1
Hi

Any info on why Bata future is trading at 3% discount to its spot.

30/11/2015 FUT close @ 482.8
30/11/2015 SPOT close @ 499.5

Here i dont see any corporate action announced.

And generally what could be possible reasons for such discount values other than some corporate actions.

And what could be possible price moves ( direction )after Fut entering into discount zone.

If any one has done practical observation on this topic, please share if it is worth spending time towards this.

thanks.
 
#2
Hi

Any info on why Bata future is trading at 3% discount to its spot.

30/11/2015 FUT close @ 482.8
30/11/2015 SPOT close @ 499.5

Here i dont see any corporate action announced.

And generally what could be possible reasons for such discount values other than some corporate actions.

And what could be possible price moves ( direction )after Fut entering into discount zone.

If any one has done practical observation on this topic, please share if it is worth spending time towards this.

thanks.
This large discount occurs when either of the following is present :

1) There is large dividend declared which gets inbuilt in spot cash price.

2) There is a short squeeze in the particular counter and shorters have rushed to cover at the end of the day.

Smart_trade
 
#4
Useful info. Thanks.
This happens when there is shortage of delivery in the counter.We used to see this happen in Reliance counter many times in past. Shorters used to be squeezed in the counter for want of delivery and they rush to cover at any price to avoid the auction.

Smart_trade
 
#5
This happens when there is shortage of delivery in the counter.We used to see this happen in Reliance counter many times in past. Shorters used to be squeezed in the counter for want of delivery and they rush to cover at any price to avoid the auction.

Smart_trade
In some scrips, I see them moving from discount to premium to par 3-4 times a day.
 

mohan.sic

Well-Known Member
#6
This large discount occurs when either of the following is present :

1) There is large dividend declared which gets inbuilt in spot cash price.

2) There is a short squeeze in the particular counter and shorters have rushed to cover at the end of the day.

Smart_trade
1) I checked it but dint see any kind of corporate announcement, so may not be case of divident.

2) This discount was there from atleast 10 days and so it cant be due to auction buying or covering the positions.

Any other reasons in your idea ...