“The outlook is turning negative as foreign investors are selling. Provisional rollovers are lower than the previous series and people have exited long positions,” said Chandan Taparia, derivatives analyst at Motilal Oswal. “10500 is likely to be hit in the next series.”
Getty Images“11000 would be the resistance for the market for now,” said Sneha Seth, derivatives analyst at Angel Broking.
Mumbai: Fewer positions were carried forward to the October derivatives series on expiry of the September contracts on Thursday as traders fretted about the near-term market prospects following the recent selloff. Analysts said traders, who squared off their bullish bets amid the recent market decline, mostly stayed on the sidelines, while some created fresh short positions with foreign portfolio investors (FPIs) dumping shares worth Rs 6,000 crore in the past six sessions.
Nifty futures’ rollover to the October series was 71 per cent, lower than the three-month average of 78 per cent, according to provisional figures.
“The outlook is turning negative as foreign investors are selling. Provisional rollovers are lower than the previous series and people have exited long positions,” said Chandan Taparia, derivatives analyst at Motilal Oswal. “10500 is likely to be hit in the next series.”
India VIX is up by 24 per cent on expiry-to-expiry basis. VIX has spiked by around 17 per cent this week. “Higher volatility suggests bear grip with capped upside in the market. Volatility is spiking after the series-on-series declines for last five series,” said Taparia.
After logging gains in the last three derivatives series, Nifty index closed the September series with a loss of 6.52 per cent and also wiped out the entire gains of the last series. Concerns over delayed recovery in the economy pulled down the Bank Nifty by 13 per cent and traders carried more of short positions into the Bank Nifty October futures. Nifty and Sensex ended down 3 per cent on Thursday, marking their worst fall in four months, as foreigners continued their selling spree after the US Federal Reserve officials urged the need for a further fiscal stimulus and declining hope over Congress approving aid to cope with the impact of Covid-19.
Meanwhile, resurgence in virus cases in Europe has led to countries grappling to curb the spread of the virus and there are talks of fresh lockdowns. India, too, is recording higher number of cases.
Indian stock indices have now fallen around 10 per cent from the recent highs but they are still up over 40 per cent compared to the calendar year lows of March.
Rajesh Palviya, head of technicals and derivatives at Axis Securities, said leverage positions have got automatically cut in the last few days due to mark-to-market pressure and there is caution due to global uncertainty. The continuous fall over the last few sessions has also prompted market participants to stay on the sidelines, he said.
“People don’t want to carry the risk of creating fresh short positions also,” said Palviya.
Derivatives analysts said the indices are also precariously positioned on the technical charts. Nifty on Thursday closed below the 200-day exponential moving average of 10,838 and is close to breaching the 200-day simple moving average of 10,760. The 200-day moving average is a long-term technical indicator and a fall below that level indicates that the index is in a bearish trend.
The highest open interest in Nifty Put options for October expiry is at 10500 followed by 10000 strike, while maximum Call open interest is at 11500 followed by 12000 strike.
“11000 would be the resistance for the market for now,” said Sneha Seth, derivatives analyst at Angel Broking.
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