Looking at the derivative data, 12,000 is on cards for Nifty: Centrum Broking

Jay Purohit

Nifty50 started the March series on a weaker note as open interest (OI) on February expiry was at the lowest level in the last three years, but closed on a strong note.

It started rallying right from the beginning of the series and continued to make ‘Higher Highs and Higher Lows’ as the month progressed.

Eventually, Nifty concluded the March series with a massive gain of 7.20 percent over its February expiry close. The up move was also supported by a heavy long build-up in index futures.

The rollovers in Nifty stood at 66.73 percent, which is slightly higher than its quarterly average of 65.46 percent. The open interest increased by 21.35 percent on expiry-to-expiry basis, which clearly indicates that participants are carrying their long positions to the April series.

Foreign institutional investors (FIIs) also participated in the ongoing rally as they were net buyers in the cash market segment in the last 25 consecutive sessions and cumulatively bought equities worth Rs 46,980 crores in the same period.

On the other hand, DIIs sold equities worth Rs 13,500 crores in March series. Highest open interest for April monthly expiry is placed at 11000 put and 12000 call options.

Considering the overall derivative data, we are expecting a continuation in the ongoing optimism in Nifty towards the 12,000 mark.

The Bank Nifty showed tremendous outperformance in March and hit a new all-time high of 30,496 on expiry day i.e. March 28.

The banking index rallied by 13.55 percent on the expiry-to-expiry basis, which is the biggest monthly gain in the last three years.

Bank Nifty added a huge amount of long positions in this up move and most of the positions got rolled to the next series as we are witnessing 92.37 percent rise in open interest on expiry to expiry basis.

The rollover (71.29 percent) in BankNifty is in line with its quarterly average of 72.24 percent. In the month gone by, we saw a good amount of long build-up in most of the banking heavyweights and rollovers are also on the higher side.

The BankNifty is moving in uncharted territory and may continue to move higher towards the 31,500 mark in coming days.

Since witnessing a humongous rally in benchmark indices, most of the stocks also ended the March series on positive note along with long build-up.

Among them, we witnessed a good amount of long positions getting rolled in stocks like Repco Home, Oriental Bank, Syndicate Bank, Just Dial, RBL Bank, Muthoot Finance, DLF, DCB Bank, Jubilant Foodworks, and HDFC Bank, etc.

While, stocks which added shorts in the March series and the same got rolled in next series include names like Motherson Sumi, Birlasoft Ltd, Vodafone Idea, Tech Mahindra, and Dabur, etc.

(The author is Technical & Derivatives Analyst, Centrum Broking Limited)

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