Data from equity derivatives trading signal a happy May ahead, at least during the initial days. Rollover of Nifty open positions for May series picked up, particularly, on the last two days. It’s heartening to see that most rollover this time is on the long side while short positions are allowed to expire on the April settlement day — Thursday. Nifty 50 Index at 9,860 showed a good strength in April by gaining 14 per cent and Nifty Bank closed at 21,534 surging over 12 per cent; in March, Nifty 50 slumped 23 per cent.
Retail remains bearish
The Nifty futures saw a rollover of 67 per cent, slightly higher than the three-month average of 66 per cent and way higher compared with last month rollover of 62 per cent. Bank Nifty futures, where most retail investors trading interest lie, witnessed an even bigger position of 78.4 per cent, as against three-month average of 64 per cent; last month, rollover in Bank Nifty futures stood sharply lower at 55.19 per cent. The market wide rollover at 78-80 per cent too is sharply higher as against three-month average of 69 per cent.
Interestingly, except retail investors, all other other categories such as proprietary, foreign investors and domestic investors are bullish on index futures.
“Markets are being driven mainly by hope and the week ahead will be awaited, because the new lockdown policy will be known by the first trading day of the week, and investors will take cues from that. Any easing will be positive, along with announcement of stimulus packages to benefit the most affected. Earnings results have been subdued so far, as expected, with investors more interested in the commentary and outlook rather than the previous quarter numbers. This will drive stock/sectoral specific moves in the market for the next week also,” said Vinod Nair, Head of Research at Geojit Financial Services.
Volatility Index slips
India VIX, which captures the underlying volatility of Nifty, fell sharply, indicating better days ahead. From a high of 83.61 on March 24, the fear gauge has slumped to 33.99 on Thursday. The volatility index captures the expected movement — upside or downside — of the underlying index over the near term. Generally, the volatility gauge moves in the opposite direction with respect to the underlying index.
CBOE Volatility index, which captures the mood at the US, also slipped considerably to 31 levels.
According to a Chennai-based analyst, a fall below 35 is comforting, and bode well for the bullish direction of market. “However, the current value is still higher when compared with its average movement between 15 and 22. So, one has to be careful whether the downward momentum will sustain or spike again,” he cautioned and advised traders to trade within their risk.
Among the sectors, telecom, textiles, finance, metals and automobile saw a healthy rollover while FMCG witnessed weak rollover.
Counters such as Vedanta, Tata Motors, BHEL, Hindalco, IOC, ICICI Bank, NTPC, Infosys, Tata Power and ONGC saw an increase in open interest along with share price; on the other hand, Idea, SBI, IDFC First Bank, Punjab National Bank, ITC and Hindustan Unilever witnessed rise in open interest but fall in share price, signalling accumulation and rollover of short positions to May series.
SBI Life in, Adani Power out
The NSE has included SBI Life Insurance Company in derivative trading from May contracts and excluded Adani Power. The existing series on Adani Power (May and June), will, however, be allowed to be traded, the NSE statement said.