Analysts said foreign fund managers have predominantly rolled over bearish positions to June, while domestic traders remained bullish though the benchmark indices extended losses to the fifth straight trading session.
NSE‘s Nifty fell 216.05 points, or 0.95%, to close at 22,488.65, and BSE‘s Sensex declined 617.3 points, or 0.83%, to end at 73,885.60, on Thursday. Both Nifty and Sensex have shed about 2% in the past five trading sessions.
The slide has resulted in the undertone becoming edgy and the Nifty nearing a crucial support, said analysts.
“The index is currently precariously placed with the significant 50EMA (exponential moving average) zone lying near 22,380 levels,” said Vaishali Parekh, vice president – technical research, Prabhudas Lilladher. “The index needs a decisive move past the 22,700 zone for the bias to improve and with the election outcome event nearing, high volatility and fluctuations are expected in the coming days.”
About 69% of Nifty futures contracts were rolled over to June, as against 65% to the May series and three month average of 68%, according to stock exchange data.”FPIs (Foreign Portfolio Investors) have been sellers not only in the cash segment, but they have been on the short side in the index futures segment for most part of the May series,” said Ruchit Jain, lead research analyst at 5Paisa.com. “They formed some longs before expiry, but have not rolled over the long positions to the June series, and have 87%of the positions on the short side with over 3.38 lakh net short contracts open.” Nifty’s rollover is higher than its three month average and past month roll over, but indicates mix of long and short positions, indicating that a tug of war may continue in near term, said Chandan Taparia, head of technical and derivatives research at Motilal Oswal Financial Services.
While the general election results will be out on June 4, markets will track the exit polls scheduled over the weekend. The recent 88% surge in the Volatility Index, or VIX – a fear gauge for the market, in the past one month suggests the mood among traders is nervous. The index remained flat on Thursday at 24.18 level.
FPIs net sold shares worth ₹3,050.15 crore on Thursday. So far in May, they have pulled ₹27,500 crore out of Indian equities.
The rollover for Bank Nifty stood at 67%, which is the lowest in the past three years, lower than 74% seen in April 2024.
There has, however, been a buildup of bullish positions in private bank stocks.
“Sectorally, private banks see a bullish buildup and can continue to do well, whereas there is a weakness across IT stocks given the correction in global markets this week,” said Jain.
Taparia sees bullishness from participants in Nifty Auto and PSUs and said stocks like Samvardhana Motherson, Bharti Airtel, Exide have seen a long buildup.
