Nifty F&O Series Ends With Worst Losses In Nine Months
Losses widened in July with Nifty 50 falling 5 percent to posts its worst series since October 2018.
The futures and options series of the Nifty index posted losses for the second successive month in July after Budget 2019 proposed a hike in surcharge on the super rich and foreign investors registered as non-corporates or trusts.
This comes after Indian benchmarks underperformed global peers since June on account of an economic slowdown, liquidity crisis and a delayed monsoon. The July series started with a weak handover from June which until then was the worst series of 2019.
Losses widened in July with the Nifty 50 falling 5 percent to posts its worst series since October 2018 when the index had fallen 7.8 percent, or 852 points, due to the IL&FS crisis.
This led to outflow of foreign capital of nearly Rs 12,500 crore from the secondary market in the month of July—the highest since October last year.
The India VIX Index—the popular fear gauge that tracks investors’ perception of volatility for a month ahead—fell 13 percent in July, falling for the third straight series. Still, the series saw negative returns as the Nifty Index ended with a loss of 5 percent or 589 points, and the Nifty Bank Index shed 7.1 percent or 2,226 points.
Nifty Rollover
The Nifty futures rollover for August series was lower both in percentage and open interest terms. Rollover for August series stood at 73.7 percent against 80.4 percent in previous series and the August series starts with futures open interest base of 1.79 crore shares compared to 1.92 crore shares in July, lower by 7 percent. The rollover cost was also seen lower at 0.48 percent compared to previous series of 0.55 percent.
Nifty Bank Rollover
The Bank Nifty contracts witnessed liquidation of long position by traders in the July series. The bank futures have an open interest of 0.14 crore shares at the beginning of August series compared with 0.18 crore shares in the previous contract. In percentage terms, Nifty Bank rollovers were higher at 76.5 percent against 80.9 percent in preceding series.
Nifty IT Rollover
The Nifty IT Index ended lower by 3.2 percent in July series. Rollovers were at 87.9 percent with open interest of 14,000 shares against 90 percent in the previous series with an open interest of 15,000 shares, indicating liquidation of long positions
Market-Wide Rollover
The rollovers were at 91 percent with an open interest of 374 crore shares against 90 percent in the previous series with an open interest of 361 crore shares. The increase in rollover shares and considering the advance to decline suggests significant addition of short positions in the stock futures.
The market breadth of F&O stocks remained negative in the last four expiries. For the July series, it ended with only 28 shares advancing against a decline in 133 shares.
Sector Rollover
- Positive rollover: Pharma, power, media
- Neutral rollover: Oil & gas, consumer goods
- Negative rollover: Auto and auto ancillary, private banks, PSU banks, metals & telecom
BoB Capital Market’s Amit Shah’s Bets
Stocks For July Series
Long Bets
- Power Grid
- ICICI Prudential
- Asian Paints
- Dabur
- Infosys
Short Bets
- Reliance Industries
- Tata Steel
- Balkrishna Industries
- Exide Industries
- Bank of India