The sharp surge in the market after trading resumed led by private lenders, which soared on the government’s decision to lift its embargo on the grant of government businesses to these banks, pushed market participants to carry forward their wagers ahead of the expiry of the February series on Thursday.
Brokers and traders have been worried that the rollover process of derivative positions would be disrupted and would heighten confusion on Thursday if the NSE did not resume trading on Wednesday.
“Rollovers stood at 34 per cent on Tuesday for Nifty and they were firm on Wednesday morning before the glitch at 42 per cent. They picked up after the uncertainty around the technical glitch got over,” said Rajesh Palviya, Head-Technicals and Derivatives at Axis Securities.
Nifty rollovers stood at 55 per cent at the end of Wednesday’s trading session, which is in line with the three-month average. “There would have been high volatility if the trading had not resumed but now that positions have been rolled over, the expiry day will not see as much volatility as feared before the trading resumed,” said Palviya.
A trade that raised a few eyebrows was the Nifty February expiry futures contract hitting a record high of 15,524 with about 1,47,300 shares being traded at that price. The trade happened between 4:17 and 4:18 pm. The Nifty was trading at around 14,925 at that time.
Nithin Kamath, CEO, Zerodha, attributed “thin liquidity” as the cause for the trade being executed at market rate.
Axis’ Palviya and Sunil Pachisia, head of institutional sales at Pratibhuti Vinihit believe that a large short order could have been placed for squaring off “at market”. Given the shallow liquidity, the order could have been executed at 15,524.
The technical glitch that started at around 10:05 am resulted in the NSE — which controls a majority of the trading volumes in India — halting trades in cash as well as the derivatives segment at 11:40 am till 3:30 pm. This was the longest ever outage at the NSE.
Analysts said that the extension of trading hours from 3:30 pm to 5:30 pm helped ease concerns over chaos on the futures and options expiry day.
On Wednesday, the Sensex rallied 1,030 points or 2.1 per cent to close at 50,781.69 and the Nifty ended up 274.20 points or 1.86 per cent to close at 14,982.
Abhilash Pagaria, senior manager at Edelweiss Alternative Research said ‘long side aggression’ was seen in rollovers to the March series in the early hours of Wednesday’s trading session and in the extended session after trading resumed on the NSE. “Rollovers picked up strongly in private financials and selective oil and gas stocks. Because of this pickup, Thursday shouldn’t be an extremely volatile day,” said Pagaria.
