High rollovers signal market momentum will continue

Traders carried forward bullish bets on the Nifty index to next month amid a sharp decline in the volatility index.

The F&O expiry on Thursday saw rollovers in Nifty futures touching 73 per cent, much higher than the three-month average rollover of 66 per cent.

"Despite the occasional negative news flows, the Nifty has managed to absorb them all and move higher. This certainly shows the inherent strength. To add to this, high rollovers on both Nifty and market-wide front is reflecting the fact that long bets have been intact in the market," said Yogesh Radke and Sriram Velayudhan, derivative analysts at Edelweiss Securities.

The VIX Index, after briefing declining below the 13-mark, ended near all-time low levels of 13.07. A low reading on the index points to a bullish trend, said analysts.

Some experts, however, advised caution ahead of release of important economic data indicators in coming days.

"There could be some long unwinding. We would see fresh buying happening only after the initial few events like the Supreme Court judgement next week on coal block allocations and other domestic data points," said Hemant Nahata, senior research analyst with IIFL.

According to experts, the opening to the September series has been strong with a market-wide future open interest of Rs 66,400 crore as against Rs 64,100 crore seen at the start of the August expiry.

The market-wide rollover for the August series stood at 79 per cent, also higher than its three-month average of 76 per cent.

"People are going long in some midcap counters even while they have been falling which is making them lose a lot of money. But they are still opting to do more mid-caps, which is not the right strategy," said Siddharth Bhamre, head of derivatives, Angel Broking.

Strong rollovers were seen in the automobile, FMCG, technology, healthcare and oil & gas sectors.

Though Bank Nifty futures rollovers were lower than the three-month average at 59 per cent, experts said long positions were created in some of the private banking names like ICICI Bank, HDFC Bank and Axis Bank.

Long positions were also seen in Bank of Baroda futures but it was restricted to a certain extent, as it came under the foreign institutional investor caution limit.

Some of the stock future favourites include TCS, Maruti Suzuki, Grasim, ITC, NMDC, Titan Industries, ONGC and Reliance Industries among others.