Hopes of RBI rate cut & progress on GST Bill drive traders to mount bullish bets for August

MUMBAI: Savvy traders in derivatives market, including foreign institutional investors (FIIs) and high networth individuals (HNIs), have constructed fresh long positions in August series, while carrying existing bullish positions forward to the next series.

Traders on D-Street gained confidence as worries regarding monsoon, corporate earnings are largely priced in by the markets, while global concerns such as an earlier than expected US interest rate hike and Chinese stock meltdown subside.

Punters are betting that the Reserve Bank of India (RBI) may cut interest rates in its forthcoming August policy meeting, while some are wagering on passage of the GST Bill in the current session of Parliament. Interest rate-sensitive counters such as select banking, automobiles and capital goods have witnessed higher carry forward of positions to August series.

Nifty rollover, or carry forward of trading positions, to August series were at 66%, which is almost in-line with the three-month average.

However, Nifty open interest, or outstanding positions, increased to Rs 14,400 crore, compared to Rs 12,300 crore at the start of July series. “Traders have turned bullish for August series in comparison to the previous three months.

Markets are building expectations that the RBI may ease rates going forward as monsoon have remained close to normal,” said Jitendra Panda, chief executive officer at Peerless Securities.

“Derivatives market sentiment have improved substantially, we are expecting Nifty to touch 8,650 in August series,” said Chandan Taparia, derivative and technical analyst at Anand Rathi Securities.