Rollovers high even as Nifty sees worst monthly fall in 2 years

Nifty ended the August series with a loss of around 5%

Despite high volatility in the market in August series, rollovers to next month derivative series remained high, with a cautious approach. The expiry session of the August series derivatives contracts on Thursday saw about 78 per cent of Nifty futures getting carried forwards, in line with the three-month average.

Analysts said traders had adopted a more cautious approach in carrying forwards positions ahead of the Reserve Bank of India (RBI) and US central bank meetings and the nervousness in the global market owing to developments in China.

"The roll cost was at a relatively lower 55 basis points during the expiry week, indicating that longs rolled over to the next series with a caution. The future open interest position for the next series is at Rs 76,000 crore, which indicates investors have continued their long positions into the next series, but with a cautious stance. We expect volatility to continue into the next series owing to the coming meetings of US central bank and RBI and events in China," said Yogesh Radke, head of quantitative research, Edelweiss Securities.

Nifty ended the August series with a loss of around five per cent, its biggest monthly decline since October 2013. India VIX increased significantly to highs of 35 on account of global volatility. The September series is expected to witness a change in trend, said experts. "We expect Nifty to find support at 7,750 levels and buying support if lower levels are tested. There could be a pause in the downfall in the market in September, and we could witness consolidation or an upmove from here. Any dip should be used as a buying opportunity," said Sahaj Agrawal, associate vice-president, derivatives, Kotak Securities.

"Banking and metal stocks could witness a strong bounceback from here. Capital goods could see some corrections before they start an uptrend. Beaten down stocks in the automobile space are also expected to bounce back from current levels," said Agrawal.

The bank Nifty also saw good rollovers; state-owned banks lagged behind.