November is worst F&O series in 15 months

Stocks suffered their worst setback in 15 months in the November futures and options (F&O) series that concluded on Thursday.  The benchmark Nifty fell 7.5%, most since the August 2015 derivatives series. The derivatives contracts expire on the last Thursday of every month.
 
Traders rolled over 59.5% November Nifty index futures with next month’s series. Nifty rollovers were lowest in four months. Bank Nifty rollovers stood at 60.5%, the lowest since July 2015. The overall market rollover rate stood at 81.6%, in line with the past three months.
 
The lower-than-average Nifty and Bank Nifty rollovers come amid weakness in the market due to the economic uncertainty created by demonetisation, analysts said.

The India VIX index, a gauge for market volatility, soared five% to 17.2 on Thursday. The Nifty index closed at 7,965.5, down 68 points, or 0.84%.
 
Analysts said traders have avoided long positions as they believe there will be downward pressure on the market due to weakening of the rupee against the dollar, amid consistent selling by overseas investors. The impending meeting of the US Federal Reserve, where it is widely expected to raise rates, was weighting on investor sentiment, they said.

“Nifty settled below 8,000 on F&O expiry day amid excessive volatility. Weak global cues were weighing on sentiment from the beginning, mainly in reaction to upbeat US economic data and Fed meeting minutes, reinforcing the possibility of rate hike in December. Also, depreciation in rupee against the dollar further added to pessimism,” said Jayant Manglik, president, retail distribution, at Religare Securities.
 
Foreign institutional investors (FIIs) have pulled out over $2 billion in the past fortnight from the cash market. Derivatives experts said rollovers were high in information technology (IT) stocks as they are expected to do well if weakness in the rupee persists.
 
“Through the month, we saw FII selling in index futures and now their position is a net short compared to the long position they were running post Brexit in June. Going into next expiry, we have seen high rollovers in technology stocks compared to previous expiry. Given the tailwind from a weaker rupee, we could witness outperformance from IT sector going forward,” said S Hariharan, head, sales trading, Emkay Global Financial Services.