Nifty, Bank Nifty rollovers pick up slightly

KS Badri Narayanan Chennai | Updated on August 27, 2020

But most long positions rolled over by retail investors, point out analysts

Nifty index futures has seen a rollover of almost 80 per cent, compared to the previous month 77 per cent and the three-month average of 77.40 per cent. Similarly, the Bank Nifty futures witnessed a rollover of 78 per cent to next month series compared to previous month's 75 per cent but slightly lower than the three-month average of 79 per cent.

“Rolls are higher with positive roll cost which suggests that longs are carrying to next series but again aggression is less. So overall positive to range -bound bias could continue in the September series,” said Chandan Taparia, Derivative & Technical Analyst, Motilal Oswal Financial Services Ltd.

Nifty futures closed the series with net open interest (OI) addition of 9 per cent with rise in price indicating built up of long position but overall OI is light, so at the time of any declines fresh, buying activities could emerge, he added.

However, some analysts havecautioned traders, as most of the long positions were rolled over by retail investors, and foreign portfolio investors and proprietary traders remained bearish by holding short positions.

“So, if FPIs resort tofurther aggressive built-up in short positions, retail investors may not have enough strength to hold on to their positions. Their unwinding could put pressure on Nifty,” a Chennai-based analyst, tracking cash and F&O segments, said. Further, from September 1, as a new margin regime is set to kick in, it would be very difficult for retail investors to carry over their positions if the price moves against their wish,” he added.

Softening VIX

India VIX, the volatility index, fell sharply in the August series. From 24.73, the fear gauge index declined to 18.89 levels.

“Volatility continued its downward move for fifth consecutive series which is supporting the bullish view with buying interest on any small declines in the market.,” Taparia added. Since it is the beginning of September series, the option data are scattered at various strikes.

Maximum Put OI is at 11000 followed by 11500 strike, while maximum Call OI is at 12000 followed by the 11500 strike.

“We have seen marginal Call writing in 11600 and 11800 strike while Put writing is seen at 11600 and then 11500 strike. Option data suggest a positional wider trading range in between 11200 to 11800/12000 zones,” said Motilal Oswal Financial.

Bank Nifty continued its positive momentum for fifth session and has been making higher lows on daily scale. It has given a highest daily close in last 112 sessions since March 13, 2020. “Now, it has to continue to hold above 23000 zones for a fresh momentum towards 24500 and 25000 zones,” Taparia further said.

Published on August 27, 2020

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