F&O Rollovers Suggest Weakness To Continue

The Futures and Options (F&O) data of the recently concluded March series indicate that the weakness in the market is expected to continue further in the next month. Market participants have taken the bearish view of the benchmark indices and Bank Nifty in particular in the wake of expected weak trends in the banking sector stocks. 

The Bank Nifty rollover data suggests that provisional rollover of around 85 per cent of the positions, which is higher than its last 3 series averages, points to the fact that traders expect weakness in the Banking stocks to continue and this will give them an opportunity to cover their short position going ahead. Higher rolls with negative market moves indicate that shorts are being carried to the next series.

Nifty index failed to continue its bullish momentum of the last series and settled the March series with the loss of 5.12 per cent at 14,324 levels. During the series, it made a high of 15,336 levels but sustained supply pressure was seen near to 15,300 zones which have taken index below 14,350 zones. It witnessed its weakness in the last three weeks of this series and corrected it by around 1,000 points from higher levels. 

Chandan Taparia, Derivative & Technical Analyst, Motilal Oswal Financial Services, said, “Now, till the time Nifty remains below 14,550 zones, weakness could be seen towards 14,200 and 14,000 zones while on the upside hurdles are seen at 14675 and 14800 zones. 

Bank Nifty also remained under pressure in this series and settled the series with a loss of 9.69 per cent at 33,0006 levels. Now till it remains below 33,500 zones, weakness could continue towards 32,500 and 32,000 zones while on the upside hurdles are seen at 33,500 and 34,000 zones.

It has been making lower top - lower bottom from last ten trading sessions and corrected by around 4,000 points from 36,500 to 32,500 zones, Taparia said. 

India VIX closed the series on a flattish note. On an expiry-to-expiry basis, volatility is marginal down by 0.84 per cent at 22.69. India VIX made a high of 29.64 marks in this series but witnessed cool off from higher zones. Volatility is not giving any clues as even after the decline of 1,000 points, VIX is flattish in such a market.

On the options front, Maximum Put OI is at 14,000 followed by 13,500 strikes while the Maximum Call OI is at 15,000 followed by 16,000 strikes. Options data suggests an immediate trading range in between 14,000 to 14,800 zones.

Sector-wise Nifty FMCG closed on the flattish note while profit booking was seen in Auto, PSU Banks, Energy, Metal, Pharma and Financial sectors.”