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Indian rupee's exchange-traded options went into a tizzy on Wednesday after brokers asked clients to submit proof of underlying exposure on their derivative contracts or unwind their existing positions, three market participants said. This came after brokers thought a central bank rule, to be effective on April 5, that exchange-traded rupee derivative transactions can be used only for hedging meant brokers had to collect proof of such exposure before allowing such trades. However, as Reuters exclusively reported, brokerages were doing so of their own volition and had not been instructed to do so by the central bank. The premium on out-of-the-money dollar/rupee put options expiring on April 26 soared up to 250%, despite spot dollar/rupee inching up 0.04% to 83.4200. Typically, the premium on put options should fall when spot prices rise, unless there is a change in volatility expectations. Further, the option premium on the 83.25 strike put was higher than on the 83.3750 strike put. A put option allows the buyer to sell dollar/rupee at the strike price on the expiry date. A right to sell at a lower strike price should cost less. "The liquidity in options is drying up, bid-ask prices are wider, leading to the anomalies (in premiums)," said Sajal Gupta, executive director and head of forex and commodities at Nuvama Institutional. "It's a very challenging situation out there." Out-of-the-money call options for the April 26 expiry climbed between 100% and 300%. "This is unprecedented. The forced unwinding of positions is leading to full-on panic," said a head at a large brokerage, declining to be named due to company orders to not speak to the media on any matter related to rupee currency derivatives. "We had, in a way, anticipated this and yesterday itself we were asking our clients to exit their positions."

Private carrier Air India on Wednesday launched a revamped loyalty programme with a simplified structure, offering more rewards and added benefits to its customers. In its first overhaul in more than a decade, the revamped loyalty programme -- Flying Returns -- moves away from the legacy model of miles-based collection of points to a fairer, more equitable spend-based approach, Air India said in a statement. Members of the programme will now be able to avail the benefits and collect points based on the new structure, starting Wednesday, it said without divulging the number of the existing members. Some of the features of the revamped programme include no expiry of points for active members, no blackout dates, same tier privileges, collection and redemption across Star Alliance partner airlines worldwide and new customer-friendly digital interface to provide a one-stop platform for transactions, among others, it said.

Following a powerful earthquake in Taiwan, the Indian Taipei Association has urged Indian nationals in Taiwan to adhere to advisories issued by local authorities. They have also established a helpline for assistance and guidance to Indian nationals living in Taiwan."In view of the earthquake striking off the coast of eastern Taiwan during the early hours of Wednesday, 03 April 2024, the following emergency helpline has been setup by India Taipei Association for assistance, guidance, or clarification to all Indian nationals living in Taiwan: Mobile: 0905247906 Email: ad.ita@mea.gov.in," the India Taipei Association, said in a post on social media platform X."All Indian nationals are further requested to follow advisories issued by the local authorities," the statement added.— ita_taipei (@ita_taipei) The earthquake, measuring 7.4 on the Richter scale, struck Hualien City, resulting in four fatalities and at least 57 injuries. Rescue operations were initiated by local authorities in affected areas, with reports of collapsed buildings and trapped individuals.In Zhonghe district of New Taipei City, the city's fire department rescued four people from a collapsed warehouse, while in Xindian, another building saw its foundation sink. All 12 individuals trapped in the latter incident were rescued without injuries.Although Taiwan, Japan, and the Philippines canceled their tsunami warnings, observed tsunami waves prompted caution along the coasts of Taiwan and southwestern Japanese islands. No major damage was reported due to these waves.The earthquake's epicenter was located in the Pacific Ocean, south-southeast of Hualien County Hall, with intensity levels reported in various regions across Taiwan. A tsunami alert was issued, particularly for Miyakojima and Okinawa islands, cautioning residents about potential waves reaching up to 3 meters.Despite the seismic activity, immediate reports indicate no significant damage, but vigilance and adherence to local advisories remain crucial in ensuring safety.

Smallcap indices are set to wipe out recent losses sparked by market regulator Securities and Exchange Board of India's (Sebi) warnings of froth in the broader markets, as investors remained bullish on this segment last month. A nine-day rally in the Nifty Smallcap 250 index has put it on track to reclaim the level last seen on February 27 when Sebi's warning caused the bulls to hit a bump.The Nifty Smallcap 250 index has gained nearly 6% in a week though its 1-month change still reflects an over 1% value erosion. Smallcaps have been in the top form, outperforming their large and midcap peers over the past 12 months. The Nifty Smallcap 250 has jumped by over 70% during this period. On Wednesday, around 10:50 am, the index was up by over 100 points or 0.70% at 15,000 level.“The bounce back in small-cap shares was expected to be sharp,” a Bloomberg report said quoting Chokkalingam G, a strategist at Equinomics Research. Investors have been preferring smaller companies with better business fundamentals and “there is clearly a shift to quality,” he said.Also Read: Nifty may surge to 23,400 before general election outcome, says ICICIdirect; here’s whyThe rout followed a relentless advance in such shares, driven by robust earnings and a recurring gush of cash from individual investors. The rebound underscores the continued bullish outlook for smaller firms, which are expected to benefit more than their larger peers from the nation’s robust economic growth.Sebi’s comments had triggered a sharp selloff in smaller companies. The S&P BSE Smallcap Index erased more than $80 billion in market value in less than two weeks through mid-March, Bloomberg report said.On Tuesday, Sebi Chief Madhabi Puri Buch said that the current record valuation for local equities was an emphatic vote of confidence by foreign portfolio investors (FPI) in the country’s growth prospects.“Why is it that our markets are commanding this price to earnings multiple which is higher than not only the average of the world indices but also when compared with various nations?” Buch at a CII event on corporate governance.“At 22.2x, yes, some people say that we are an expensive market but, still, why is the investment coming? Because this is a reflection of the optimism and the trust and faith the world has in India today that we are commanding this kind of multiples in our markets,” she added.Notwithstanding some late selling, foreign portfolio investors (FPI) were net buyers in March with equity purchases worth Rs 35,098 crore. The month's performance eclipsed the lacklustre show over the previous two months, aided by strong buying trends in capital goods, automobiles, financials, telecom and real estate.In 2024, so far, FPIs have purchased domestic shares worth Rs 10,893 crore. In January they were net sellers and sold equities worth Rs 25,744 crore and followed it with purchases worth Rs 1,539 crore in February. While broader markets have performed strongly in the past 12 months, headline index Nifty's returns have been nothing short of impressive. The 50-stock index has given returns of nearly 29%.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)