Traders ignore recent weakness; roll over bullish Nifty bets to August

The rollover in Nifty futures to August was about 80% against the three-month average of 79%, according to provisional data. A rollover happens when a trader closes the position before expiry and opens a similar new position in the next month’s contract. The process happens only in futures contracts.

“We have seen long rollers being aggressive which is an indicator that traders are pretty optimistic heading into August series,” said Sriram Velayudhan, vice president, IIFL Securities.

Reliance Industries, ICICI Bank, HDFC Bank and NTPC are some of the stock futures, which have seen strong bullish rollovers. The rollover in single stock futures on Thursday was 93%, in line with the three-month average.

Velayudhan expects the Nifty to trade in the range of 19,400-20,000 in the August series.

On Thursday, NSE’s Nifty fell 118.4 points, or 0.60%, to close at 19,659.9. BSE’s Sensex declined 440.3 points, or 0.66%, to end at 66,266.8. Both indices had opened higher, mirroring the positive close on Wall Street Wednesday night, as the US Federal Reserve extended its interest rate-hiking spree citing continued inflation pressures. But gains fizzled out on selling pressure from institutional investors. On Thursday, foreign portfolio investors (FPIs) net sold shares worth ₹3,979 crore. Their domestic counterparts were buyers to the tune of ₹2,528.15 crore.

Indian equities have mostly been weak since July 20, when the Nifty hit another all-time high and came close to hitting the 20,000 mark. Since then, the index has slid almost 2% amid concerns that the market had run-up too fast and was overbought.Option activity at the 19,800 strike in Nifty provides cues about the index’s direction, said Ashwin Ramani, derivatives and technical analyst, Samco Securities.

“A strong close above 19,800 only will lead to a resumption of the uptrend,” he said. “Nifty is likely to find support around 19,500 zones.”

Analysts said at 19,500, the index is at its 20-day exponential moving average – a key technical support.