Rollover data hint at Nifty trading in a tight range

Mumbai: Traders rolled over fewer derivative bets to the May series on Thursday - when the April contracts expired - as the bumpy ride in the market has dampened sentiment. Analysts said the lack of confidence in the market's direction has prompted several traders to assume the Nifty is likely to move in a tight band.

The rollover in Nifty futures to May contracts was at around 78% as against the three-month average of 83%.

"Technical indicators are showing that the markets are not out of the woods for the moment," said Rajesh Palviya, head-technicals and derivatives at Axis Securities. "Till the time the US markets do not see a sharp move, we could also be stuck in a range."


Indian equities surged on Thursday, bolstered by the gains in global stocks. BSE's Sensex advanced 701.67 points, or 1.23%, to end at 57,521. NSE's Nifty moved up 206.65 points, or 1.21%, to close at 17,245.

Palviya expects the Nifty to move between 17,000 and 17,500 in the next few weeks. Thursday's rally is a continuation of the bumpy ride that has kept market participants on the edge over the past week.

"Traders will initiate fresh long positions only if the Nifty manages to cross beyond the 17,400 levels," said Manoj Muralidharan, vice president-derivatives, Religare Broking. "Foreign investors are still predominantly short on the market."

If the Nifty manages to break above the hurdle of 17,400, it could even cross 18,000, said Muralidharan.

Stock indices have swirled between gains and losses on worries about the impact of US Federal Reserve's expected monetary tightening on the economy, elevated commodity prices due to the ongoing Russia-Ukraine war and most recently the spread of Covid cases in China.

The rollover in Bank Nifty futures to May on Thursday was at around 85% as against the three-month average of 91%.

Analysts said sectoral rollovers did not exceed 85%, suggesting scepticism. Among sectors, traders are most bullish on consumer, cement, auto and oil stock futures, if rollover figures are to go by. They carried forward short positions in information technology and metal counters.

Elsewhere in Asia, markets rose on Thursday led by Tokyo's Nikkei 225, which gained 1% after the Bank of Japan maintained its near-zero interest rate stance and maintained its massive stimulus programme. The Yen plunged to a 20-year low. This is in stark contrast with the tighter monetary policies adopted by central banks in developed economies as they struggle to keep a lid on accelerating prices. Stoxx Europe 600 was up 0.62%.

HUL shares jumped 4.5% after the company's better-than-expected fourth quarter results offset concerns over margin pressures. Asian Paints and power stocks too contributed to the upsides.

Beyond blue chips, gains in the broader market were relatively modest with NSE's mid-cap 150 index moving up 0.6% and small-cap 250 index edging 0.3% higher. Losers edged past gainers in the ratio 1,755: 1,654 across share categories on the BSE, suggesting that the broad market undertone remains uncertain.