Sensex 300 points rally highlights the 'spirit of Mumbai' but low rollover tells a different story

Doubled the investors' wealth

The ‘spirit of Mumbai’ once again came to the fore, a day after when India’s financial capital witnessed torrential rains which were 30 times the average, brought Mumbai to a standstill and left many traders finding home in their office.

The D-Street, too, had a rub off effect as it witnessed a sharp selloff of over 1 percent thanks to weak global cues. But, Wednesday was a new day for D-Street as both Sensex and Nifty witnessed sharp gains.

The S&P BSE Sensex rose 340 points on Wednesday after taking a hit of over 1 percent in the previous trading session while the Nifty50 closed slightly below its crucial resistance level of 9,900.

The volume activity was anticipated to be weak but towards the close of the trade it picked up and was around average volume traded. As of 02:30 PM, 9,036 lakh shares got traded and traded volume was close to Rs17,000 crore.

A.K.Prabhakar, Head -Research at IDBI Capital who is working from his home amid heavy rainfall in Mumbai said that volumes are unlikely to get impacted because of expiry. Most of the dealers are back in office despite being a holiday declared by the Maharashtra govt.

“Even BSE & NSE did the same thing. Everyone provided a space to stay and the food was provided – so the work goes as usual. And, rains are only in Mumbai and not across India so volumes might be lower but that will not be an overhang,” he said.

In the equity derivative segment, total turnover was close to Rs6 lakh crore which was slightly below the average volumes witnessed but more than the volumes there is a different trend emerging in Nifty rollovers which were below averages.

Analyst attribute to the low rollover to slightly muted activity on Wednesday due to rains in Mumbai and another major factor could be the fact that traders see limited upside in markets.

“The volume activity has not picked up even though we are just one day ahead of expiry. Main volumes are happening because of options activity because there are a lot of strikes in Call and Put options which saw additions of 20 lakh in OI,” Chandan Taparia, Derivatives and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Options traders are driving the volume activity in markets. The rollover stands at 35 percent which slight below the rollover seen in earlier expiries. Historically, we have seen rollover of 45-50 percent on the penultimate day of expiry,” he said.

Taparia further added that one reason for limited rollover activity could be low participation as most Mumbai-based investors are not trading and the other reason could be the fact that market participants see limited upside in markets.

Top ten stocks which saw maximum rollover include names like Dabur India, Castrol India, Divi’s Laboratories, Century Textiles, Glenmark Pharma, Indiabulls Real Estate, REC, Infibeam, HCL Technologies, and HDFC Bank among others.