F&O EXPIRY: More stock than Nifty futures rolled over

Trading activity likely to be concentrated in specific shares than broader indices

Traders carried forward fewer Nifty futures positions to the April series on expiry of March contracts on Thursday than the previous three months, as they felt less confident about the index’s near-term prospects after a seven per cent rise in a month. But, they rolled over more stock futures bets to April, indicating activity is likely to be restricted to specific shares than the broader indices.

Analysts said traders carried forward long positions in stock futures of the banking and capital goods sector on Thursday. “Traders rolled over more stock-specific bets to the next series compared to Nifty futures, which was evident in high rollovers in stock futures and low rollovers in Nifty index futures. With the Nifty gaining more than 10 per cent from recent lows, the market is clearly expecting limited upside in the Nifty and bets on individual stocks for April,” said Yogesh Radke, head of quantitative research, Edelweiss Securities.

While the rollover percentage for Nifty futures was lower than the three-month average, rollovers for overall market positions were in line with the average. About 56-57 per cent of Nifty futures positions were rolled over, whereas the overall market rollover was about 71 per cent, according to provisional data. The NSE Nifty closed at 6,641 on Thursday, up 0.6 per cent from its previous close. Analysts are sceptical about the Nifty crossing 6,700 levels.

“Considering the overall positions in the market, the chances of profit-booking at these levels are higher. Rollover in Nifty futures is not very aggressive and foreign investors have been closing long positions in the Nifty,” said Sahaj Agrawal, deputy vice-president (derivatives research), Kotak Securities. The Nifty would not go below 6,400 levels, he said. Siddharth Bhamre, head of derivative analysis at Angel Broking, believes that the low percentage of rollovers in the Nifty positions does not necessarily mean that investors are bearish on the market.

“We need to look at the number of open interest positions created as well. The open interest positions as we move into the April series are higher than what were at the beginning of the March series, which shows that FIIs are bullish on the Nifty direction,” said Bhamre. Open interest positions on the Nifty futures stood at Rs 11,300 crore going into the April series compared to the Rs 9,000 crore worth of open positions created in the March series. Rollovers in the Bank Nifty futures stood at 67 per cent, with open interest positions amounting to Rs 2,000 crore. The Bank Nifty, since the last expiry, has risen by 17.4 per cent. On Thursday, it closed at 12,604, up 0.7 per cent from its previous close. “Rollover in the Bank Nifty was at 67 per cent as the positive momentum around the sector continues to be there. There have been good aggressive bets on PSU bank stocks as well as some of the large-cap names,” said Radke. Volumes for Bank Nifty derivatives hit a record high of Rs 40,630 crore on Thursday, according to exchange data. Of this, Bank Nifty options accounted for Rs 33,902 crore.

Traders built long positions in stocks like SBI, HDFC Bank, Kotak Mahindra Bank and IndusInd Bank. In the capital goods sector, L&T, Voltas and Crompton Greaves continued to attract investor interest. But traders stayed wary of the BHEL counter on account of growth concerns in the company. Oil marketing companies like BPCL and HPCL also saw trader interest.

Rollover in technology and pharma contracts was lower compared to banks and capital goods as the sectors have fallen out of investors' favour for the moment, partly because of rupee strength and higher risk appetite.