Nifty F&O rollovers hint at improving markets sentiment

Mumbai: Traders carried forward bullish bets on Nifty to the April derivative series on Thursday when the March contracts expired, encouraged by the recent resilience in the markets. Analysts, however, said position build-up was relatively modest as traders expect limited upsides in the Nifty in the near-term after running up more than 11% from March lows.

"Markets gained on the back of short covering in the March series but a major build-up of long positions is yet to come," said Rajesh Palviya, head-technicals and derivatives at Axis Securities. "There is scope for more gains, at least in the first half of April."

Rollover in Nifty futures to the April series on Thursday was at 82%, higher than the three-month average of 77%, said analysts.

Rollover costs in stock futures rose to 45-46 basis points on expiry day from an average of 30 basis points in the last two series expiry days. Analysts said the rollover cost increased for Nifty futures as well. When rollover costs go up, it is a sign that traders are willing to pay more to carry forward positions, a bullish sign.

Market-wide rollovers stood at 90%, in line with the three-month average of 91%. Bank Nifty rollovers at 92% were higher than the three-month average of 82%.

The Nifty closed at 17,464.75 on Thursday. In the March series, the index gained 7.49% and the Sensex gained 7.4%. Nifty Media, Metal, Energy Realty and IT indices gained 11-25% while the Bank Nifty underperformed the benchmark with a gain of just 3%.

Derivative analysts see the Nifty rising to 17,900 in the April series.