The expiry session for the August derivatives series on Thursday saw 73.84% market-wide rollover to the September series, the lowest level since July 2012, as institutional investors preferred to let their bearish bets on the Nifty and individual stocks expire.
The Nifty futures rollover to the September series, too, was weaker at 51.87%, substantially lower than 60%, the average of the last three months, and 59%, the average of last six months.
Rollovers indicate how many of the current month’s open interest positions in the futures segment are being carried forward to the next two-month series.
Jitendra Panda, head of broking at Capital First Securities, says that many of the foreign institutional investors (FIIs) who had taken short positions as a hedge against their equity holdings in the cash segment, have not carried over those positions, thereby resulting in lower rollovers.
The Nifty on Thursday surged 2.35% on the back of some short-covering in the derivatives segment; but for the entire series, the Nifty ended with losses of 8.5%.
Short-covering was apparent as the markets rose without any major buying in the cash segment on Thursday. While FIIs continued their selling streak for the tenth consecutive session, selling equities worth Rs 28.18 crore in the cash segment, the domestic institutions, too, were net sellers by Rs 76 crore.
The rollover in the Bank Nifty at 70.24% was, however, higher than the three months’ average of 62% with investors still carrying over their short bias over to the next series.
Yogesh Radke, head of quantitative research at Edelweiss Securities, says that while the Bank Nifty has seen short side bias, long bias has been witnessed in IT and metal stocks.
Experts believe the markets in the next series would continue to remain volatile with news on the global front (read the Syria crisis) and the rupee movement playing an important role.
“It’s very difficult to say what the market levels would be even a week from now as overnight news on the global front, the rupee movement and domestic policy actions would be keenly watched by market participants,” said Radke.
Panda believes that markets for now may have seen a near-term bottom as the Nifty, after touching 5120, has rebounded sharply. “But, if the situation worsens, we may see fresh shorts created by FIIs.”