Rebound spurs rollover of April bets to May series

Market-wide rollovers at 88 per cent were largely in line with last month.

BCCL
Highest open interest among Nifty call options in May series is at 9,500 while among put options is at 9,000.
Mumbai: Encouraged by the 30 per cent rebound in the market from their lows on March 24, traders carried forward their bullish bets to the May series on expiry of the April contracts on Thursday.

While fund managers and analysts have become wary about the market’s prospects after the bounce, few are willing to bet on a sharp fall immediately amid optimism about a pharma company making headway in finding a treatment for coronavirus and the US Federal Reserve’s stimulus.

Nifty rollovers stood at 67 per cent on a provisional basis, slightly higher than 62 per cent rollovers last month. Market-wide rollovers at 88 per cent were largely in line with last month.


“The open interest in Nifty May futures is 1.02 crore compared to 1.15 crore on expiry day last month. Falling volatility, rising PCR (put-call ratio) and light market position indicates there could be some more bounce in the market,” said Chandan Taparia, derivative analyst at Motilal Oswal.

India VIX has cooled off from 83.6 level in March to 33.99 level at close on Thursday tracking the market rebound. Nifty gained 14.7 per cent in April, logging the best gains in a month since May 2009. In the April series, the 50-stock index is up about 14 per cent.

Amid doubts about the health of the economy and rising Covid-19 cases in the country still weighing on the market mood, derivative analysts said positioning in index options indicates some more gains in the near future.
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Amit Gupta, head of derivatives at ICICIdirect said traders added long positions in April series once Nifty started stabilising around 7,500-8,000 levels. These long positions were rolled over into May and fresh longs have been added in May as well, said Gupta. He added that the market is now following a pattern similar to 2008 when indices fell sharply in January 2008 followed by four months of stability. “We could see 2-3 months of stability,” said Gupta.

Yogesh Radke, head of quantitative and alternate research at Edelweiss Securities said he would be cautious after a 14 per cent rally while is highest monthly return in past 11years. Nifty may stretch till 9,960 and hold a support at 9,325 levels.

Bhavin Mehta, derivatives strategist at Dolat Capital, said data since 2007 show Nifty has gained on most counts in April. “30-35 should be the short term bottom for the VIX so we could see selling once again,” said Mehta.

Highest open interest among Nifty call options in May series is at 9,500 while among put options is at 9,000.
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