Open interest at 2-year low on expiry day

Rollover slightly above three-month average

The total of unsquared positions in Nifty futures touched a two-year low during Thursday’s May series expiry session, indicating lower participation by foreign investors in derivatives markets.

The open interest (OI, the total of contracts not offset with a delivery and so, left open) in Nifty futures stood at Rs 11,000 crore, down from Rs 19,000 crore worth of positions in the April series. The rollover percentage in the Nifty futures was seen at 68 per cent lower than its three-month average of 74 per cent.

Experts said foreign investors continued to unwind positions through the month, as uncertainty in both the Indian and global markets kept traders at bay.

“Derivative participants have been unwinding positions through the month, suggesting lower participation in the segment. The two-year OI low in Nifty futures is on the back of unwinding of positions in index futures and the same has been seen across stocks' futures OI,” said Yogesh Radke, head of quantitative research, Edelweiss Securities.

Foreign portfolio investors have been net sellers of Indian equities for the past couple of months at Rs 5,939 crore, due to nervousness about events in both the domestic and global markets.

Domestically, the corporate results numbers have disappointed, with the outlook for the year ahead looking sombre, casting a shadow over recovery in the Indian economy. Globally, with the US economy on firmer footing, the US Federal Reserve looks set to raise interest rates in 2015. In Europe, Greece again seems on the verge of a default on payment it owes to the European Union.

Hopes of an interest rate cut might cheer companies starved for capital but the markets could see further profit taking, said observers, hinting at another volatile month. “Given the heavy events lined up in June, we expect the June series to be very volatile,” said Radke. Experts said the Nifty would likely trade within a 250-point band, with the upside capped at 8,500 and downside at 8,000. While a breach beyond 8,500 is unlikely at this point, a decline below 8,000 could send the Nifty tumbling to 7,700.

OI positions in stock futures fell to Rs 68,000 crore, down from Rs 78,000 crore in the April series. These had touched Rs 90,000 crore in the February series, analysts said. Rollover in stock futures was 80 per cent.

Bank Nifty futures saw a rollover of 63 per cent in the May series. “Smaller banks remained under pressure, while private banks witnessed buying at lower levels,” said Sahaj Agrawal, deputy vice-president for derivatives, Kotak Securities.

“Capital goods, information technology and pharmaceuticals witnessed mixed activity. Oil marketing companies traded with a positive bias through the series,” he added.

Market-wide futures witnessed a rollover of 78 per cent in the May series.