F&O Outlook: Markets witness weak rollovers

The Nifty RSI had touched a new low of 9.16 on January 22. Currently, it is at 20 and indicates a positive sign for a technical pull-back, according to technical analysts.

The markets continued with the bearish trend of the last session and slipped at the opening on concerns of inflation and expectation of a rise in lending rates.

The Sensex closed at 14,293 (down 278 points) and the Nifty at 4,266 (down 82 points). Selling was witnessed across the board with certain technology stocks being an exception due to the falling rupee.

The expiry of June futures contracts is just three days away and the markets witnessed weak rollovers. The Nifty rollovers were seen at 31 per cent and marketwide rollovers at 26 per cent.

The current sell-off in the markets has caused long rollovers to remain aloof for the time being, says the derivative analyst at Edelweiss Research. The Nifty June Futures were trading within a range of 2-3 points to spot for a major part of the session.

The June futures shed open interest of 6.7 million shares while the rollovers in July futures were at 4.4 million shares as bulls preferred to square off long positions as the Nifty slipped below the 4300 levels.

The Nifty July futures contracts closed with a discount of 20 points to spot Nifty, indicating short rollovers. The Nifty support at the 4300 and 4200 levels seem to be dropping to the 4100 levels.