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Traders keep bearish bets for October series amid outflow fears

Nifty futures saw rollovers of 69% compared to average of 66% in last three expiries.

, ET Bureau|
Updated: Sep 29, 2017, 08.57 AM IST
Traders mostly carried forward bearish bets to the October series on expiry of the September contracts on Thursday as uncertainty about how long will foreign fund outflows continue kept the market on the edge.

Indian stock indices snapped their longest losing streak of this year amid expiry of the September derivatives series on Thursday .However, it was the second consecutive series where Nifty has weakened and also the worst for the index since November 2016.

Nifty snapped a seven-session losing streak to end at 9,768.95, up 33.20 points or 0.3 per cent while Sensex closed at 31,282.48, up 122.67 points or 0.4 per cent. Nifty fell 1.5 per cent during the September series while Sensex fell 1.4 per cent.Bank Nifty lost 1.3 per cent during the period.

Traders keep bearish bets for October series amid outflow fears

The Nifty futures witnessed rollovers of 69 per cent as compared to average of 66 per cent in the last three expiries, while the market-wide rollovers were 83 per cent, largely in line with the last three months' average of 82 per cent. The roll cost for Nifty was 18 basis points compared to average of 26 bps in the last three expiries. Real estate and public sector banks saw more of short positions being rolled over while private banks, fast moving consumer goods and automobile stocks saw more of long rollovers.

“In the last week of expiry there was heavy liquidation of long positions in both stocks and Nifty (futures). The premium of the Nifty October futures (to spot) is low, which shows that most of the positions rolled over have been on the short side,“ said Amit Gupta, head of derivatives at ICICIdirect.

Open interest in the October series for Nifty stood at Rs 20,000 crore compared to Rs 16,300 crore on previous expiry day . Market-wide open interest stood at Rs 1.2 lakh crore compared to Rs 1.13 lakh crore on the last expiry day.

Derivative analysts said the positions rolled over to Nifty October have been on the short side and that a short-term bounceback could happen led by short covering but indices are not likely to see a runaway rally back to record high levels again soon.

“We could see a bounce back in the short term but we might not see a new high. The resistance will be at 10,000 and 9,685, the low that was hit in August, will remain a support,“ said Rohit Srivastava, fund manager, Sharekhan.

Ashish Chaturmohta, head of derivatives and technicals at Sanctum Wealth Management said that a short term pull-back towards 9,900 levels is possible.

In the options segment for the month of October, the maximum open interest among Nifty put options is at 9,700 strike followed by the 9,500 strike while the highest open interest among call options is at the 10,000 strike followed by the 9,900 strike.
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