Future and options contracts: Traders carry fewer bullish positions
Worries about Q3 earnings of domestic companies, which will kick in by the second week of January and global market volatility have led to foreign fund outflows.
By Biswajit Baruah, ET Bureau | Updated:
MUMBAI: Traders have carried forward fewer bullish positions to January series on expiry of December futures and options contracts on uncertainty about the near-term market prospects.
Worries about third quarter earnings of domestic companies, which will kick in by the second week of January and global market volatility have led to foreign fund outflows, keeping markets on the edge.
Nifty rollover, or carry forward, of trading positions to January series from December series were at 69%, which is in-line with the 3-month average. However, cost of rollover was lower compared to the previous expiries, suggesting traders were reluctant to construct fresh positions in next series because markets are stuck in a range and have not given any conclusive direction on either side, said analysts.
“We have seen increase in rollover, but roll cost has dropped significantly which indicates that even after the market recovery bulls are not aggressive to carry their position to the next series,” said Chandan Taparia, derivative analyst at Anand Rathi Securities. Nifty open interest or outstanding positions have increased to about 3.87 lakh contracts, compared to start of previous series at 2.59 lakh contracts.
Total market rollover were at 75% which is lower than the 3-month average rollover of about 80%. NSE Nifty gained 50 points or 0.63% to close at 7,946 on Thursday after testing the psychological level of 7,950. The BSE Sensex rose 157 points, or 0.61%, to close at 26,117.
“The increase in put option open interest suggest traders are cautious about January series,” said Jitendra Panda, managing director and CEO, Peerless Securities. “Data suggest markets are expecting some negative surprises in January earnings season in some key sectors.”
Taparia said: “We are observing maximum call open interest at 8200 strike, while on the put options side fresh addition was witnessed at 7800 strike.”
Among sectors such as state-owned banks, pharma, metal, and cement stocks — where earnings are expected to remain under pressure — traders have rolled over more short positions into January series. However, fresh additions of long positions were observed in FMCG and automobile counters.
“We would advise traders to short Nifty if the index scales higher to 8150 levels in January,” said Siddarth Bhamre, head of derivatives, Angel Broking. “Foreign fund flows, China’s action on its currency, corporate earnings remain crucial for market sentiments.”
Shares of Jet Airways, Container Corporation, Godrej Consumer and Torrent Pharma witnessed positive activity in cash market on Thursday as these stocks are expected to introduced in the F&O segment from Friday, 1 January 2016.
Worries about third quarter earnings of domestic companies, which will kick in by the second week of January and global market volatility have led to foreign fund outflows, keeping markets on the edge. Nifty rollover, or carry forward, of trading positions to January series from December series were at 69%, which is in-line with the 3-month average. However, cost of rollover was lower compared to the previous expiries, suggesting traders were reluctant to construct fresh positions in next series because markets are stuck in a range and have not given any conclusive direction on either side, said analysts.
“We have seen increase in rollover, but roll cost has dropped significantly which indicates that even after the market recovery bulls are not aggressive to carry their position to the next series,” said Chandan Taparia, derivative analyst at Anand Rathi Securities. Nifty open interest or outstanding positions have increased to about 3.87 lakh contracts, compared to start of previous series at 2.59 lakh contracts.
Total market rollover were at 75% which is lower than the 3-month average rollover of about 80%. NSE Nifty gained 50 points or 0.63% to close at 7,946 on Thursday after testing the psychological level of 7,950. The BSE Sensex rose 157 points, or 0.61%, to close at 26,117.
“The increase in put option open interest suggest traders are cautious about January series,” said Jitendra Panda, managing director and CEO, Peerless Securities. “Data suggest markets are expecting some negative surprises in January earnings season in some key sectors.”
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Taparia said: “We are observing maximum call open interest at 8200 strike, while on the put options side fresh addition was witnessed at 7800 strike.”
Among sectors such as state-owned banks, pharma, metal, and cement stocks — where earnings are expected to remain under pressure — traders have rolled over more short positions into January series. However, fresh additions of long positions were observed in FMCG and automobile counters.
“We would advise traders to short Nifty if the index scales higher to 8150 levels in January,” said Siddarth Bhamre, head of derivatives, Angel Broking. “Foreign fund flows, China’s action on its currency, corporate earnings remain crucial for market sentiments.”
Shares of Jet Airways, Container Corporation, Godrej Consumer and Torrent Pharma witnessed positive activity in cash market on Thursday as these stocks are expected to introduced in the F&O segment from Friday, 1 January 2016.
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