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Traders carry fewer Nifty futures into December series amid poll, rate uncertainties

Options data show Nifty has major support at 10,000 & faces resistance at 10,500.

ET Bureau|
Updated: Dec 01, 2017, 08.55 AM IST
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Options also indicate that depending on the Gujarat poll outcome on December 18, the market could have a shy at 10,600 or extend its fall to 9,800.
Options also indicate that depending on the Gujarat poll outcome on December 18, the market could have a shy at 10,600 or extend its fall to 9,800.
Mumbai: Traders rolled over a higher percentage of stock futures than Nifty futures compared to their respective three series’ averages at expiry of the November series of derivatives, reflecting a degree of caution ahead of the all-important Gujarat poll outcome and the RBI policy meet next month, which will set the tone for the markets.

This was borne out by traders rolling over 63 per cent of overall positions in Nifty futures against average rolls of 71 per cent in the past three series, according to Edelweiss Financial Services. The Nifty cost to roll over long positions declined from 39 basis points to 32 on Thursday, indicating that fewer bullish bets were carried forward ahead of the major events.

However, marketwide rolls (index plus stocks) at 80 per cent is higher than the three series’ average of 77 per cent, Edelweiss adds. Further, cost to rollover stock futures remained strong at 48-50 basis points (one bps is 0.01 per cent), indicating that bullish stock futures bets were rolled over.

The positions built on Nifty call and put options expiring on December 28, show that the market gets major support at 10,000 and faces resistance at 10,500. This means the Nifty has the potential of initially rising by 2.7 per cent from Thursday’s close of 10,227 or falling by more than 2 per cent from it.

Options also indicate that depending on the Gujarat poll outcome on December 18, the market could have a shy at 10,600 or extend its fall to 9,800. Among stocks, Ashok Leyland (91 per cent), Bajaj Auto (90 per cent), Bharat Financial Inclusion (91 per cent), Bank of Baroda (89 per cent), BHEL (91 per cent), L&T (83 per cent), ACC (90 per cent), Dabur (89 per cent), RIL (88 per cent), HPCL (87 per cent) and HCL Technologies (87 per cent) witnessed strong rollovers.

The RBI policy outcome on interest rates would be known on December 6 while the Gujarat election results will be declared on December 18.

Chandan Taparia, derivatives analyst at Motilal Oswal Securities, expects that till then the market could be a “bit choppy.” “If the market sustains below 10,300, it could decline to 10,178, while immediate hurdles are seen at 10,250,” he said.

However, certain derivatives analysts, like Amit Gupta of ICICI Securities, remain positive that the index would continue its outperformance. He points to the 52-point premium Nifty December contracts was trading at to the spot Nifty to substantiate his claim that traders still continued to remain bullish.

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