Nifty rollover at 72% in Dec; likely range 5600-6000: Angel

Angel Broking has come out with its rollover report of November-December 2012. According to the research firm, PSU banking majors SBIN (80.55%) and PNB (82.47%) have witnessed meaningful formation of short positions in last series and have now seen good rollover of it.

Rollover in NIFTY (72.07%) is quite healthy compared to last month and recent month’s averages. Though rollover in BANKNIFTY (67.96%) is less then Nifty, it is slightly above average and more importantly we have observed good amount of rise in open interest indicating formation of long positions in last week or so and which got rolled over too.

We at this juncture are facing two things. First, that the global macro scenario which was painted completely black is appearing not so bleak. Due to this we have positive global equity markets. On the other hand we have depreciating local currency. These two factors are at the opposite end of the spectrum from FII’s perspective. So we believe that liquidity would come into our markets in patches. Also if we see FII’s cash market action and compare it with DII’s action in same segment, it is quite evident that there is change of hands of equity which is happening; FII’s buying and DII’s selling. This is not a sign of a market which will give major correction.

On options front, call strike of 6000 has most activity while in puts 5600 and 5700 strikes are attracting interest. This indicates that for coming series, floor of the market remains the same but ceiling has increased.

Banking and Financials

• PSU banking majors SBIN (80.55%) and PNB (82.47%) have witnessed meaningful formation of short positions in last series and have now seen good rollover of it. In a positive market scenario, which we believe may be the case; you may witness these names showing decent upside due to short covering.
• Liquid names like HDFC (69.64%), YESBANK (68.76%), AXISBANK (63.41%), etc. have outperformed the sector and the market but have reduced open interest in absolute terms indicating their rallies supported by short covering. Interestingly, their rollover is also on the lower side indicating most of the shorts are out.
• RELCAPITAL (91.56%) has shown highest rollover in financial space and most of these positions are on the short side. Last few session stock has been on the bounce, we believe this may continue as shorts may run for cover.

Consumer goods and FMCG

• MCDOWELL-N (79.95%) has rallied around 66% last series and there has been fall of open interest of around 57%. We believe shorts have now been squeezed out of it. We suggest profit booking in this counter to those who are long. Caution that such volatile stocks should be avoided for shorting.
• Though it was not repeat of October series for TATAGLOBAL (88.82%) but it did give positive returns. We have seen significant formation of long positions in the counter. Stock appears bit long heavy. Fresh long positions can be avoided as of now.
• Both ITC (75.47%) and HINDUNILVR (77.19%) have reduced open interest in last series. With markets appearing to head higher, these defensive may take back seat for time being. Book profits and move out of long positions in them would be our recommendation.

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