F&Os may witness poor rollovers

Led by the midcap and banking stocks, indices declined marginally as the bulls surrendered longs at higher levels. The rally from the intraday lows was triggered by short covering ahead of the expiry, inline with empirical patterns.

The traded volumes were almost unchanged from the previous session as the retail participation continued to languish. The market breadth was negative as the Bombay Stock Exchange market breadth was 790:1613. The capitalisation of the breadth was negative as the sellers continued to outnumber the buyers.

The indices have closed at the upper end of the intraday range as the bear covering pushed the benchmarks higher from the opening levels. The negative internals indicate an overall selling bias.

The disparity in the intraday bars of the Nifty Feb futures and spot indicates a short covering. The intraday range specified for Tuesday between the 2785/2650 held as the Nifty traded within these parameters.

The coming session is likely to witness a range of 2790 on advances and 2625 on declines. The bullish trigger will be the 2725 levels and the bearish pivot will be the 2700 mark.

The outlook for the markets on Wednesday is that of continued bear covering as the March F&O series is likely to witness poor rollovers due to lot size adjustments. In the absence of depth, impact costs and volatility will be driven higher.

Vijay L Bhambwani 
(Ceo - BSPLindia.com)

The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com)