November Futures And Options Series Surges To Record On Nifty, Nifty Bank

The NSE Nifty index’s futures and options series gained for third straight month in November.

The index surged to a record amid a slowing economy, with industrial output falling to a seven-year low even as consumer price inflation rose above the Reserve Bank of India’s medium-term target of 4 percent for the first time in 15 months. Yet, optimism around U.S.-China trade deal and liquidity in global markets drove the indices to all-time highs.

The Nifty and Nifty Bank closed at record highs in this series surpassing their previous highs in June. While the Nifty gained nearly 2.3 percent, the Nifty Bank rose around 6.8 percent.

Fund inflows by foreign investors remained robust for the second straight month, who bought stocks worth nearly Rs 15,000 crore so far this month while domestic institutions sold equities to the tune of Rs 8,900 crore.

Banking stocks outperformed, with ICICI Bank Ltd. rising to a record following the increase in its weight in the MSCI index after it was rejigged.

Stocks of state-run banks rallied after the Supreme Court’s verdict in the Essar Steel insolvency case went in favour of financial creditors, boosting their hopes of recovery.

The Nifty PSU Bank Index gained eight percent this series. Other stocks that recovered in the November series include Indiabulls Housing Finance Ltd., Jindal Steel & Power Ltd., Bharti Infratel Ltd.; stocks that declined include Page Industries Ltd., Titan Company Ltd. and Larsen and Toubro Ltd.

Reliance Industries Ltd.—which gained eight percent in this series—became the first Indian company to cross the Rs 10-lakh-crore mark in market value, on the last day of the series.

Nifty Rollover

The Nifty rollover was higher than its three-month average of 75 percent but lower than the previous contract in absolute and percentage terms. That came even as the index closed at a record high for the November contract.

The Nifty futures rollover for December series had an open interest of 1.47 crore shares compared with 1.49 crore shares in the previous because of short covering.

In percentage terms, the rollover was slightly lower at 80 percent against 84 percent in the previous month. The rollover cost was seen in line with the previous series at 0.33 percent.

Nifty Bank Rollover

The Nifty Bank saw a strong rollover for December series stood at 70.6 percent with an open interest of 0.19 crore shares, compared with a rollover of 63.6 percent in October with an open interest of 0.08 crore shares. That implies the addition of long positions in December contracts.

Nifty IT Index Rollover

The Nifty IT index ended in the negative for November series, declining 2.8 percent. The rollovers were higher with an open interest of 9,000 shares compared to 7,000 shares in the previous contract. In percentage terms, however, the rollovers were lower at 92.5 percent compared with 95 percent in the November series.

Marketwide Rollover

The rollovers across stock futures were higher at 93 percent with an open interest of 403 crore shares compared with 375 crore shares in the previous contract. The market-wide rollover in November contracts was 89 percent. Open interest was higher on the back of follow-up buying interest seen in the midcap space.

Market Breadth Of F&O Stocks

Out of the total 148 stocks in the F&O segment, market breadth was positive with 80 stocks advancing against 68 stocks declining. Large caps showed a neutral market breadth, while mid-cap stocks showed a positive bias—33 stocks advanced against 21 stock declines.

Sectoral Rollovers

Positive rollover: Banking, Finance, Cements and Pharma

Negative rollover: Power, Technology, Construction and Selective Engineering

Neutral rollover: Consumer Goods, Automobile & Auto Ancillary and Oil & Gas

FII Set Up Ahead Of December Series

Foreign institutional investors have net long of 31,649 contracts in the December series after being net short for four straight series on the index futures, indicating a positive bias.

On index options, FIIs are starting the series on a mixed note with buying protection via puts to hedge themselves against uncertainty but are also selling more puts indicating downside to be limited.

BoB Capital Market’s Amit Shah’s bets for December series based on rollovers and technical analysis…

Long Bets

Banking: Axis Bank Ltd., ICICI Bank Ltd.

Consumer Goods: Dabur Ltd., Jubilant Foodworks Ltd., Tata Global Beverages Ltd.

Engineering: Voltas Ltd.

Finance: Cholamandalam Investment & Finance Company Ltd., Bajaj Finserv Ltd.

Pharma: Torrent Pharmaceuticals Ltd., Divis Laboratories Ltd.

Cement: Shree Cement Ltd., The Ramco Cements Ltd.

Short bets

Power: Adani Power Ltd.

Engineering: Cummins India Ltd., Bharat Electronics Ltd.

Aviation: InterGlobe Aviation Ltd.