Bank Nifty | Nifty: F&O rollover signals bank index may underperform broader Nifty

Mumbai: Traders carried forward a higher number of Bank Nifty futures than on Nifty to the July series on expiry of the June contracts. Analysts said the trend indicates that Bank Nifty might continue to underperform the Nifty. Foreign investors’ bullish bet rollovers were in line with that of the previous expiry, shrugging off uncertainties around the US Federal Reserve’s hawkish statement last week that has made the market undertone jittery. But, few want to bet against the market, which has stayed afloat thanks to flows from domestic investors.

The Nifty ended Thursday at 15,790.45, up 0.66%, while the Bank Nifty closed up 0.73% at 34,827. The Nifty has outperformed having fallen 0.7% from its life high of 15,901.6 on June 15 while the Bank Nifty has corrected almost 8% from its high of 37,708.75 on February 16.

Nifty’s open interest — (OI) or outstanding positions — on Thursday was 97.22 lakh shares against one crore shares on the expiry day of the May series. The Bank Nifty will begin with OI of over 19 lakh shares in July compared against 17.7 lakh shares in the past series.

“It appears that long liquidation has been witnessed in Nifty while shorts have been rolled over in Bank Nifty, which might continue to underperform the broader Nifty index,” said Siddharth Bhamre, director, alternate investments company, InCred Equities.

FIIs will begin the new series with 82% bullish bets on index futures — Nifty and Bank Nifty — against 88% last month. So far in this fiscal, they have net purchased Rs 3,449 crore of shares, show NSDL data. After selling shares worth Rs 12,613 crore in April and May, they net purchased shares worth Rs 16,062 crore in June. But since June 16, after the Fed meet where the central bank hinted at raising rates as early as 2023, foreigners have been pulling money out of stocks. These investors sold stocks worth almost Rs 5,600 crore since June 16 excluding the inflows on June 18, when they purchased shares in Carlyle’s share sale of SBI Cards worth Rs 4,800 crore.

F&O Rollover

On Thursday, FPIs net sold shares worth Rs 2,891 crore, while cumulative bullish bets on index futures — Nifty and Bank Nifty—stood at 90,197 contracts from 57,491 contracts a day ago. Clients, which include corporates and HNIs, increased bearish bets on index futures to 35,986 contracts from 8,488 contracts. Shares that witnessed higher rolls include RIL, TCS, Havells, . Most shares witness higher rolls as they have now become compulsory delivery from cash settlement earlier.

Rajesh Palviya, derivatives head at Axis Securities, pegged the Nifty’s range for the July series at 15,500-16,200 and Bank Nifty at 34,000-35,800.