Rollovers robust as market scales highs

F&O turnover crosses Rs 5 lakh cr for first time

The market moving to new highs isn't making the investors on Dalal Street dizzy. If the rollover data is anything to go by, traders believe there is more steam left in the rally, despite the benchmark indices gaining nearly 10 per cent in October.

The rollover in Nifty futures to November was nearly 70 per cent, compared to 65 per cent witnessed during the expiry day of the September series. Derivative analysts said rollover — reinvesting money from a futures or option contract that's about to expire into same contract expiring later —was high and most traders carried forward bullish bets.

“Rollover is high and mostly on the long side,” said Siddharth Bhamre, head-derivatives, Angel Broking. “Foreign investors, who had built long positions have rolled it over.”

Unlike the previous month, rollover this time around was with high open interest built up. The total open interest in the Nifty was 4.2 million contracts, while that for the Bank Nifty was half a million. Incidentally, the combined trading turnover witnessed in the futures and options segment of both NSE and BSE, was the highest ever at Rs 5.15 lakh crore, 17 per cent higher than the previous high seen during August series expiry.

The benchmark Nifty index has gained 9.8 per cent in October, its biggest monthly gain since January 2012, led by strong foreign inflows, thanks to the US Fed deferring the tapering of its monetary stimulus programme, and stability in the domestic currency.

The 50-share NSE Nifty on Thursday gained 0.76 per cent, or 47.45 points, to close at 6,299.15.

Bhamre said the Nifty is expected to move higher in the near term as 'stronger hands' - FIIs or investors with greater staying power - remain long on the market, while the 'weaker hands' have stayed out of the market.

Sahaj Agrawal, deputy vice-president- derivatives research, Kotak Securities, also expects the market perform well in the early part of November.

"Immediate range for the index is seen at 6,170-6,425. Positive spillover is expected in the early part of November with resistance seen at 6,425,” he said.

Experts said investors should adopt caution in case the Nifty falls to 6,100-6,150 levels. Analysts said concentration of open interest on the Nifty is seen at 6,300 call and 6,000 put options, highlighting the band the index is expected to trade.

Analysts said high rollovers were seen across the board, especially in high beta sectors such as banking and real estate.

“We remain positive on the markets for the medium-term and would advise accumulating frontline stocks on any meaning full corrections. Banking, infra and oil and gas are the preferred sectors,” said Agrawal.