Street Sees High Rollover to Mar, In­flows Likely to Sup­port In­dices

The Economic Times - - Companies: Pursuit Of Profit -

Rollover of Nifty fu­tures to the March se­ries at 73%; mar­ket-wide open in­ter­est at an all-time high

Mum­bai: March is likely to be a month of un­cer­tainty for the stock mar­ketwith­theUSFed­er­alRe­serve meet­ing to de­cide on rate in­creases and re­sults of var­i­ous state elec­tions­due.But,that­did­not­stop­traders from car­ry­ing for­ward record po­si­tions to the March fu­tures and op­tions se­ries (F&O) on ex­piry of Fe­bru­ary con­tracts as the Nifty hit hit 52-week high on Thurs­day.

Rollover in Nifty fu­tures to March was 73%, higher than the three­mon­thav­er­a­geof 69%.The­mar­ketwide rollovers at 77% were in line with the av­er­age. The mar­ket-wide open in­ter­est of ₹ 1.08 tril­lion on Thurs­day was an all-time high and the open in­ter­est of 27 lakh con­tracts in the Bank Nifty was the high­est since July 2010.

“Mar­ket-wide open in­ter­est is at the high­est level ever in­di­cat­ing huge lever­age po­si­tions in the mar­ket. Since the mar­ket is over-lever­aged, any neg­a­tive news­flow can lead to a knee-jerk fall,” said Yo­gesh Radke, head of quan­ti­ta­tive re­search at Edel­weiss Se­cu­ri­ties.

On Thurs­day, the in­dices rose 0.1% to close at a five-month high. The Nifty scaled a 52-week high of 8,982.15 and the Sen­sex crossed the 29,000-mark for the first time since

Septem­ber 8. The clos­ing level of 8,939.5 for the Nifty was the high­est a se­ries has ex­pired at since Jan­uary 2015. Nifty’s open in­ter­est onThurs­day­was ₹ 20,200crore­com­pared to ₹ 16,500 crore when the Jan­uary con­tracts ex­pired.

Since po­si­tions are on heav­ier side and Nifty is near the re­sis­tance of 9,000, a cor­rec­tion could be on the cards. “9000 will come but it will be tough to sus­tain. Risk re­ward is not favourableas­t­he­mar­kethas­ral­lied sharply from the lows even as the over­all trend is pos­i­tive,” said Chan­dan Ta­paria, de­riv­a­tive an­a­lyst, Moti­lal Oswal.

BJP’s per­for­mance in the state elec­tion­swill­beatestof the­gov­ern­ment’s pop­u­lar­ity and if the US Fed raises rates in March and sig­nals more over the next, that would weigh down mar­ket sen­ti­ment.

How­ever, con­tin­ued liq­uid­ity sup- port from DIIs will pre­vent a big fall in in­dices, an­a­lysts said. Nifty Mar­chop­tions­datashowed­high­est con­cen­tra­tion at 9,000 strike among call op­tions and at 8,500 strike among­putop­tions­fol­lowedby8,800 strike. “If ev­ery­thing goes fine, mar­ket can go to 9,200. The lower volatil­ity pe­riod will con­tinue and cor­rec­tions may not be too large,” said Amit Gupta, head of de­riv­a­tives, ICICIdi­rect.

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