Sensex gains 100 points, Nifty above 8,050 ahead of F&O expiry

Sentiment was also influenced by rollovers of F&O contracts of the December series

Extending gains for the second straight day, the benchmark indices continued to trade higher tracking positive trend seen in Asian markets after Wall Street rose supported by upbeat consumer and housing data. 

Sentiment was also influenced by rollovers of futures and options contracts of the December series ahead of Thursday’s expiry.

At 11:22 am, the S&P BSE Sensex was trading at 26,304, up 91 points, while the broader Nifty50 was ruling at 8,066, up 34 points. 

"The consolidation in the 7,900 in the last two days prompted shortcovering rallies that now threaten to break stronger resistances. The steepness and volumes of Tuesday’s rise are supportive towards continuation of upsides, but several congestion resistances appear near 8,073 and above, and potential for a turn lower after some more rise, needs to be factored in,"said brokerage Geojit BNP Paribas in a technical note. 

Meanwhile, on Tuesday, foreign investors sold equities worth Rs 712 crore, while domestic investors bought shares worth Rs 1,502 crore. 

Sectors and stocks

Cipla, Wipro and Dr Reddy's were the top Sensex gainers and gained up to 2% on the BSE. 

Sunil Hitech hit its upper circuit of 5% after the company informed bourses that it has bagged an order worth Rs 434 crore in the state of Arunachal Pradesh for National Highways & Indrastructure Development Corporation LtdBSE 0.52 % on Engineering, Procurement & Construction (EPC) Mode.

Bharat Financial Inclusion rallied 6% to Rs 548 in intra-day trade, extending its Tuesday’s 8% surge on the BSE, after the company said Morgan Stanley Asia (Singapore) & Morgan Stanley Mauritius raised stake in the company by 1.10 percentage points via open market.

 

Rollover Analysis

Market-wide rollovers so far stand at 48% which is higher compared to average rollovers of 38% (last three series). Market wide futures open interest (OI) stands at Rs 1 trillion compared with an OI of Rs 0.96 trillion on the second last day of November expiry. Roll levels continued to remain under pressure at nearly 39-40 bps (cost to long roller) as compared to nearly 41-43 bps seen yesterday. 

Nifty rollovers stand at nearly 48% which is in line compared to the average rollovers of 47% (the last three series). However, Nifty rollovers slowed down a bit in Tuesday's session after a grand start on Monday (41%) on the back of cheaper roll levels on the SGX Nifty futures by 2 points of Nifty, where participants preferred rolling. 

Nifty futures roll cost was nearly 31-33 bps (27 points). Nifty futures hold an OI of 25.3 million shares (Rs 203 billion) as compared to 22.69 million shares (Rs 182 bn) on the second last day of November expiry. Around 15,000 Nifty contracts were rolled, while nearly 10,100 contracts were added in the next series.

Rollover activity saw pick up in Engineering (43%-29%) and Oil & Gas (44%-27%) on the D-2. Counters where rolls have picked up are LIC Housing Finance (52%-18%), Hindalco (56%-27%) and HDFC Bank (66%-38%). 

Global Markets

Asia stocks followed Wall Street higher on Wednesday, while the dollar firmed against the yen following the release of upbeat US economic data overnight.

Crude oil prices held large gains on expectations of supply tightening once oil-producing nations implement a scheduled output cut.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4%. Australian stocks rode a rise in commodities to gain 1%. Indonesian shares added 1.9% while Shanghai shed 0.1%. Japan's Nikkei was little changed.

US stocks had risen slightly on Tuesday, supported by upbeat consumer and housing data, with gains in technology shares lifting the Nasdaq Composite to a record close.
 

(With inputs from Reuters)