Oct rollover points to bull run MUMBAI: You just can't keep a bull down for long, at least in India. That's the message one gets, going by the trend on Thursday when the September series of derivatives contracts expired.
True, rollover figures have often been misleading in the recent past. But if you go solely by what they are telling us this time around, bulls are all set to make a stunning comeback. This is ironical considering that the settlement day saw the Nifty lose well over a percent. However, if you had asked a Nifty bull mid-way through September, whether he/she would be happy with a settlement above 4100, the answer would have probably been a very vociferous 'yes'. For, given the hysterical (many call it historical) scare that the bulls had got in the third week of the series, notwithstanding the overall losses of the series, it's the bulls, who have marched into October, with much more confidence than the bears. As is evident in the adjoining chart, the number of shares that the October futures added on each of the past four days of the September series (except a small quantity on the 24th) were much higher than that were shed by the September futures. This makes it absolutely clear that along with what was being rolled over from September, a substantially large amount of fresh build-up was happening in the October futures. If you see this in conjunction with the fact that the premium on them was constantly heading northwards — from less than 20 points on Monday to close to 50 points on Thursday — it becomes absolutely clear that there has been a massive long build-up in the October futures. Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ The bullish bias is also validated by the rollover figures, which at 62.56% in the Nifty is substantially lower than the past three months average of 70.14%. Even in absolute terms, at just 2.73 crore shares, the rollovers have been much lower than the past three months average of 3.21 crore shares. While it may puzzle many as to how low rollovers could be a sign of bullishness, taking into consideration the mid-month scare in September, low rollovers simply mean that the massive amount of short positions that existed in the September series have not been rolled over into October. Even rollovers in single stock futures (SSFs) at 77.24% were much lower than the past three-month average of 82.23%. However, in absolute terms, at over 99 crore shares, rollovers in single stock futures were slightly higher than the past three month average of 96.84 crore shares. But given that SSFs are mostly used to create leveraged long position, this slightly higher rollover may not necessarily be a bearish sign. In terms of specific stocks, at over 97%, while rollovers in Bharat Forge were one of the highest, those in Thermax were ZERO. This means that there isn't a single outstanding position in Thermax in either October or November. Yet another signal for the NSE to be more careful while including stocks in the derivative segment. In the options segment, the largest build-up in a call is at 4300 and those in a put is at 4100, making 4100-4300 the battle zone, at least in the first few days of the October series. However, given that the build-up at the 4300 call is less than half of what the build-up is at the 4100 put, 4100 becomes a far bigger support than the resistance that 4300 is expected to offer. -- Visit site at – http://investorline.co.in/ Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ Investor Forums- http://forums.investorline.co.in/ Iwebs Open Source Web Publishing Platform - http://webs.investorline.co.in/iwebs/ --~--~---------~--~----~------------~-------~--~----~ Get latest market updates & search internet right from your browser-download our toolbar here- http://investorline.ourtoolbar.com/ Visit our site at – http://investorline.co.in/ Newsroom: http://newsroom.investorline.co.in/ Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ Investor Journal - http://research.investorline.co.in/ Newscatcher- http://catcher.investorline.co.in/ Interested in Financial Planning-Let us Contact you- http://spreadsheets.google.com/viewform?key=pb_z4f1_zGMg4iBBFT3-SWQ&email=true If you like the site then promote it here- https://www.freetellafriend.com/tell/?url=http://investorline.co.in/blogs/news Create your own free blog on- http://investorline.co.in/blogger Visit this group at http://groups.google.com/group/india-investor -~----------~----~----~----~------~----~------~--~---
