Markets are on fire today..Sensex is up 400 points past 16800 as Reliance gallops yet again past a cum 1:1 Bonus Rs 2100
But what was interesting is the arbitrage available in SESA GOA
Spot Price has surged to Rs 354 as Company announced during market hours that FII,Templeton had increased their stake….. and the Futures Price is Rs 338…….that’s a price differential of 4.5%
Futures Market Lot is 1500 shares for Sesa Goa
So all those holding atleast 1500 shares of SESA GOA can take this arbitarge….Sell in Spot at Rs 354 and Buy in the Futures at Rs 338….Net of Transaction Costs,you’ll reducing holding cost by atleast 4% as the favourable differential on each contract lot of 1500 shares is over Rs 20000….so if you hold 7500 shares,that’s five futures lots,you’ll be able to bring in over Rs 100000 and reduce your holding cost of Sesa Goa….If your holding has been for the long term,there will also not be any tax payable on the Capital Gains when you sell in Spot
So what’s the Risk ?….that this differential will remain for some time yet…so you can always roll over and square of when there is an insignificant differential….and this will happen…such huge arbitrage opportunities don’t remain for too long
Looks very Tempting