Sentiment remains weak as traders roll over more bearish bets in November

MUMBAI: Traders have carried forward a greater proportion of bearish bets to the November series as the Nifty and Bank Nifty rollovers (rolls) were significantly higher than in the previous series and happened amid a market decline. This indicates a possible continuation of the corrective trend, which has seen the Nifty fall almost 14 per cent over the past 38 sessions, at least until jitters in the global markets and fears of a debt market crisis back home abate.

On Thursday, the stock market ended weak, mirroring the weakness in rest of Asia and the overnight fall on Wall Street.

BSE’s Sensex fell 343.87 points or 1.01 per cent to close at 33,690. NSE’s Nifty dropped 99.85 points or 0.98 per cent to close at 10,124.9. The broader market too ended weak with losers outnumbering gainers 1631:881 across categories on the BSE.


Rollovers of Nifty/Bank Nifty, at expiration on October, were 76 per cent/79 per cent (2.2cr/17 lakh shares) against 63 per cent/66 per cent (1.72cr/13.7 lakh shares) in the previous series, according to IIFL . Marketwide rollovers stood at 85 per cent versus 87 per cent in the previous month.

October witnessed the Nifty — which corrected 7.7 per cent — fall the most in 62 months. Adding to traders’ woes, “the higher than average rolls accompanied with market decline are indicative of short aggression,” said Chandan Taparia, derivatives analyst, Motilal Oswal Securities.

Rollovers for Nifty & Bank Nifty were higher in terms of total open interest (number of open positions) vis-à-vis last month as well as the average of the last three months, indicating further volatility in the November series.

Options expiring on November 29 peg 10000 as the support and 10500 as resistance. The 10000 put has an OI of almost 30.7 lakh shares (75 shares make a contract). The 10500 call has OI of 17.03 lakh shares.

Angel Broking has cautioned traders against taking bearish bets, but adds in the same vein that creation of longs would be inexpedient until the market decisively pulls back above 10240 levels amid the current correction.

“…. we still reiterate that one should avoid going short now; but at the same time, going long (especially carrying overnight positions) does not seem to be a right ploy due unexpected sell off in the global peers, said Sameet Chavan, chief analyst, technical and derivatives, Angel Broking. “ At this juncture, we would rather wait for Nifty to surpass and sustain above the important intraday swing high of 10242. If it manages to do so, that would trigger some immediate recovery in the market. Till then one should avoid taking undue risk. On the lower side, 10079 has now become a new multimonth low.”