F&O rollovers see Nifty falling to 10000

The stock market is likely to witness a downward trend next month too, going by the rollovers of trader positions into March series.

Maximum open interest for March series in Nifty options is at 10000 put with estimated 3.2 million shares followed by 10700 call and 11000 call with estimated 2.5 million and 2.6 million shares, respectively.

This means that more people are betting that the market will decline.

“Considering overall derivative activity, we are expecting Nifty to correct towards 10000 mark in the coming month and thus, any bounce towards 10700 – 10750 should be used to exit long positions. Aggressive traders can even initiate fresh shorts around the mentioned zone,” Jay Purohit, technical & derivatives analyst, Centrum Broking, said.

Market-wide rollover of positions on the last day of February expiry was 78% against an average 80% for the last three series.

For February series, Nifty dropped 6.2%, its worst close since October 2008. All gains earned in the January segment were wiped out.

The open interest (OI) dropped in the start of March series to Rs 1.37 lakh crore as against Rs 1.65 lakh crore seen at the beginning of February expiry.

Rollover in Nifty (62.34%) is below its quarterly average of 67.54%. Rollover in Bank Nifty (65.27%) too remained on the lower side, both in term of percentage as well as open interest,.

Though on the last day of February expiry the rollover picked up, the long roller participation was seen in the market.

With rollovers picking, trading in the last hour on Thursday receded and Sensex shed 25.36 points, or 0.07%, to close at 33819.50 while Nifty fell 14.75 points or 0.14%, to 10382.70.

“We hold a cautious view on the index for March expiry. On the upside, 10600-10650 will serve as a resistance while on the downside psychological level of 10,000 can’t be ruled out. Any breach of 10000 mark will pave way for an immediate dip of further 100-150 points,” Yogesh Radke, head of alternative and quantitative research, Edelweiss Securities, said in a report.

“The rollover data shows slight slower movement. It indicates that investors are liquidating their position. Overall the trend is negative,” Chandan Taparia, derivatives and technical analyst at Motilal Oswal Securities, said.

The major draggers have been banks, metals, energy and pharma. The Nifty banks tanked 9.07% from 27,652 to 24,681.

Long positions were rolled over in stocks like IDBI, Ashok Leyland, Apollo Hospitals, Escorts, Hind Zinc and Bharat Forge, according to Centrum.

BEAR SIGNAL

• Market-wide rollover of positions was 78% against an average 80% for the last three series
   
• For February series, Nifty dropped 6.2%, its worst close since October 2008, wiping out all gains of January