Nifty rollovers below 3-month average

Unwinding of long positions seen after sharp run-up in the May series

Investors rolled over fewer positions to the June derivatives series, signalling that they could have taken some risk off the table following sharp gains this month. The recent surge in equities had left very little scope for further gains in the market, said participants, who felt the upward trajectory of the indices could be capped in the coming month. The rollover percentage of Nifty futures in the May series onto the next month was 60 per cent, in line with the previous month expiry but lower than its three-month average of 65 per cent. Marketwide rollovers stood at 64.5 per cent as against the three-month average of 62.7 per cent.

“A few long holders opted not to roll over positions and chose to book profits as many of the stocks have surged more than 25-50 per cent in the May expiry,” said Yogesh Radke, head of quantitative research, Edelweiss Securities.

During this series, the BSE mid-cap index gained by about 14.2 per cent. The benchmark indices – BSE Sensex and NSE Nifty – during the same period rose about six per cent each.

Analysts believe the upside for the Nifty could be capped at 7,500 levels. The market has breached the 7,500 mark twice in this month but has failed to close above that level due to profit-booking.“The Nifty has seen a very sharp run-up from 6,500 to 7,400 levels. Everybody is expecting a correction in the market as they believe it is in the over-bought zone,” said Alex Mathew, head of research, Geojit BNP Paribas Financial Services.

Many of the counters, especially in the mid-cap segment, saw heavy selling on Thursday. “There were not many short positions created except for certain pockets in the IT and pharma sectors. It was more of long unwinding, expected in a market that has run-up this sharply,” said Bhavin Desai, equity derivatives analyst, Motilal Oswal Securities.