Nifty hits a new record, F&O rollovers signal momentum

The Nifty hit a record 20,291.55 during the day, before slipping somewhat to close at an all-time high of 20,267.90, up 0.67% from its previous close. The Sensex rose 0.74% but missed hitting its all-time high, closing at a 10-week high of 67,481.19.

Analysts expect the momentum to continue with demand outstripping supply, as witnessed last week when five public share sales to raise ₹7,378 crore attracted bids worth a whopping ₹2.6 trillion.

The Indian economy expanded 7.6% in the second quarter, Thursday’s data showed, beating expectations by a wide margin. Meanwhile, exit polls for assembly elections suggested the Bharatiya Janata Party (BJP) might win Rajasthan and put up a strong fight in Madhya Pradesh.

“The confluence of a blowout GDP print and exit polls giving BJP Rajasthan and calling a close contest in MP, while showing that a stronger Congress could lead the Opposition coalition for the national elections next year, with Chhattisgarh and Telangana in its pocket, reinforced the bulls who are waiting to buy every dip,” said Nilesh Shah, managing director, Kotak Mahindra AMC. “With expanding retail and HNI appetite on display during last week’s IPOs, and FPIs turning buyers, the momentum should continue,” Shah said.

The previous highs for Nifty and Sensex stood at 20,222.45 and 67,927.23 on 15 September. The market has since corrected from those levels, with the Nifty falling 6.8% to a low of 18,837.85 through 26 October on selling by foreign portfolio investors (FPIs), before picking up on strong retail buying and the resumption of foreign inflows.

The small-cap and mid-cap benchmarks hit fresh highs for the second straight session—the NSE Midcap 150 made a fresh high of 16,127.95 while the Nifty Smallcap 250 surged to 13,381.20.

Thursday’s trading session, which coincided with the expiry of the November series of futures and options, indicated a continuation of the bullish momentum, with marketwide rollovers hitting a historic high of ₹3.03 trillion, Nuvama Research said.

Rollovers involve investors and traders carrying forward their stock futures contracts to the next month, which then becomes the active futures contract. Monthly contracts expire on the last Thursday of every month. The activity of traders on expiry suggests the market mood.

“The market’s recent undertone and roll costs strongly suggest the potential for new highs, possibly reaching 20,450 will be a cakewalk,” said Abhilash Pagaria, head of research at Nuvama. “Expect some volatility around state election results this weekend, presenting opportunities to add long bets on any market declines.”

At the start of December series, meaningful open interest (outstanding positions) addition is seen in auto (current open interest at ₹205 billion on the long side), cap goods ( ₹117 billion long side), realty ( ₹43 billion long side), pharma ( ₹149 billion long side) and energy ( ₹74 billion long side).

Domestic institutions purchased $1.7 billion worth of shares in November while FPIs turned net buyers of $1 billion after net selling shares worth $4.7 billion in the preceding two months.

Shares that led the Nifty rally on Friday included Britannia, Larsen & Toubro, Axis Bank, NTPC and ITC, which rose between 2.4% and 3.2%.

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Updated: 01 Dec 2023, 11:34 PM IST