Traders roll over bets on rate cut hopes

Analysts said the market would see volatility ahead of RBI's policy review. It is widely expected the RBI will cut the policy rate by 25 bps on Tuesday

Traders rolled forward long positions on expectations of an interest rate cut by the Reserve Bank of India (RBI) at its monetary policy review meeting on Tuesday. In the rate-sensitive and high-beta banking sector, rollovers were high compared to the average of the previous three months, while overall rollovers were in line with previous months.

The Bank Nifty rollover stood at 66.2 per cent, while overall market-wide rollover was 81 per cent. The Nifty rollover stood at 59 per cent, against the previous three-month average of 63 per cent.

The September series derivatives contract expired on Thursday.

“The market-wide rollover was in line with previous months. A positive bias was witnessed, as investors are expecting RBI to cut rates next week. Shares in high-beta sectors such as banking and realty saw positive build-up,” said Yogesh Radke, head of quantitative research, Edelweiss Capital.
 

Analysts said the market would see volatility ahead of RBI’s policy review. It is widely expected the central bank will cut the policy rate by 25 basis points on Tuesday. “The market is expected to be volatile, given the RBI policy next week and the beginning of the results season after that,” said Bhavin Desai, equity derivatives analyst, Motilal Oswal Securities.

The NSE India Vix index, an indicator of volatility, closed at 20.88 on Thursday, up one per cent. The index posted its steepest weekly rise in four weeks. The Nifty closed at 7,868.50, up 0.3 per cent. Market players expect the Nifty to move between 7,600 and 8,200 in the next series.

The benchmark BSE Sensex also ended marginally higher by 40 points at 25,863.50.Despite Thursday’s gain, the 30-share index posted its first weekly loss in three weeks with a fall of 355 points or 1.35 per cent.

Market will be closed on Fridayon account of Eid.