Markets ended the July F&O series on a woeful note as both the Nifty50 and Bank Nifty index crashed. The Nifty50 index slipped below the 11,300-mark to close at 11,252 as both Q1 results of major companies (declared so far) and the Union Budget disappointed marketmen, especially foreign portfolio investors.
The Nifty50 index tumbled 4.98 per cent this series — the worst since October 2018; Nifty Bank and Nifty Midcap’s fall in July series was also the biggest in 10 months.
The Nifty50 futures witnessed a rollover of 73 per cent, which is much lower than the last month series (80 per cent); the three-month average was 75 per cent. Similarly, the Bank Nifty also saw a rollover of 76 per cent, much lower than the last month position of 83 per cent, and the three-month average of 80 per cent.
Marketwide rollover also slowed down to about 85 per cent, from 90 per cent earlier.
“During the major part of the series, we hardly saw any relevant build-up in index futures; however, good amount of shorting was seen in the expiry week. Stronger hands continued their selling streak for the third consecutive month as they sold to the tune of ₹12,394 crore this month (excluding Thursday’s figure) and nearly ₹15,218 crore in the last three months,” said Sneha Seth, Derivatives Analyst, Angel Broking.
On the options front, across-the-board short-selling was seen in Nifty out-of-the money call and put option strikes. The trading pattern in options suggests 11,400 as an immediate resistance and 11,200 as the support for the index in the weekly series.
“After quite some time, we witnessed put-call ratio (PCR) plunging below one and we believe this was mainly because of call writing during the series,” Sneha added. The PCR for index options currently stands at 0.82.
However, the comforting factor is that despite such a sharp sell-off, India VIX, the volatility index, fell by about 1 per cent at 12.635 per cent, indicating Nifty could have only limited downside.
With most companies having announced their Q1 FY20 results, action is likely to be stock specific, said analysts and warned investors to remain cautious.
Unwinding of long positions
While counters such as Asian Paints, PVR, Lupin, Torrent Pharma and Infosys saw long build-up, Ashok Leyland, Bajaj Auto, Maruti, M&M, Axis Bank, Bank of India, YES Bank, Bajaj Finance, Bajaj Finserv, L&T Finance Holdings, Reliance Capital, Bata India, Titan, NBCC and NCC witnessed accumulation of short positions.
Tata Global, Hindustan Unilever, ITC, Britannia, Indiabulls Housing Finance, UPL, SBI, HDFC Bank, ICICI Bank and Siemens witnessed unwinding of long positions.
Last week, the NSE excluded nine securities from F&O trading as these were found to be ineligible based on its selection criteria. Those stocks were Arvind, Birlasoft, Engineers India, Hindustan Zinc, IDBI Bank, Kajaria Ceramics, Multi Commodity Exchange of India, Oracle Financial Services Software and Raymond.
Traders should remember that only August and September contracts will be available for trading in these stocks.