Driven for short bets by foreign institutional investors (FIIs), Nifty index declined 3.4% in the October series. The Nifty futures rollovers at the start of the November series stood at 83% versus 79% in the last three series, a Nuvama report said. The Nifty futures started the new series at a higher open interest (OI) base of Rs 21,900 crore comprising 1.16 crore shares versus OI of Rs 20,400 crore comprising 1.04 crore shares seen at the start of the October series, the report added.
Their net shorts stood at 152,000 contracts at the start of the November series versus 57,300 short contracts at the start of the October series, which in Nuvama’s view was “one of the most sizable short bets” taken at the start of the series.
These trends signify a significant short build-up and on the expiry day on Thursday, the rollover cost for Nifty was around 50-52 bps as compared to the previous day’s 50 bps, the report said further.
Market-wide futures open interest at the start of the November series stands at Rs 2.71 lakh crore as compared to Rs 2.86 lakh crore at the start of the October series with rollovers at 92%, higher than the three-month average of 91%.
On the other hand, FIIs marginally decreased short bets in single stock futures with their net shorts standing at 136,000 contracts at the beginning of the November series versus 144,000 net short contracts at the start of the October series.
The report also points out to the stock futures rollovers standing at 94%, higher than the average rollovers of the last three series at 93%. The roll cost for SSF (single stock futures) stood at 63-66 bps as compared to the previous day’s of 66-70 bps.
Sectorally, a meaningful OI reduction is seen in oil & gas at the start of the November series at Rs 20,200 crore on the short side. For financial services, it stands at Rs 22,000 crore also on the short side. It is followed by (Rs 14,300 | Short side) and Energy (Rs 53,000 | Short side).
November Series Outlook
The brokerage sees a “captivating narrative” to unfold for heavyweight stocks in the November series with a formidable barricade at 19,300 to 19,400. According to its estimates, FII’s bold short bets add a thrilling twist and Nifty could dip to around 18,700 before an ascent to 19,100 materialises.
“The banking should continue to be a laggard on the basis of market momentum. Nifty rolls traded richer versus Bank Nifty and overall quantitative scoring, while the auto, FMCG and large cap IT stocks should be a potential outperformer,” the Nuvama report said.
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