Short rollovers from FIIs desk; avoid bottom fishing: Angel Broking

Views of Ms. Sneha Seth (Derivative Analyst, Angel Broking):

"We instigated February series with benchmark index hitting a record high of 11171.55. But, this ecstasy lasted only for a day as we witnessed strong bout of selling post the important event (Union Budget). In the course of action, the index fell sharply to test sub-10300 levels in merely six trading sessions. This was followed by some breather and hence, the second half of the series was seen with a range bound action. However, it was noted that every attempt to bounce within this consolidation was getting sold into and hence, eventually the expiry concluded with biggest single series fall after November 2016.

As far as index futures activity is concerned, we witnessed decent profit booking followed by some fresh short formation. The rollover (62.34%) in Nifty is on the lower side in terms of percentage as well as OI. We believe majority of long positions which were rolled to February series have been lightened up; resulting March series starting with a lower base.

In the series gone by, the volatility index surged to 14-month high due to sudden sell-off ; courtesy to uncertainty in US markets. Stronger hands too tuned bearish as they sold equities worth Rs. 14360 crores. They also formed massive shorts in index futures and exited decent amount of their longs in the same segment. Now, the index futures 'Long Short Ratio' has declined from 80% to 49% series on series; which certainly does not bode well for the Bulls. Considering the above data points, we would advise traders avoiding any kind of bottom fishing as we may see further pain going ahead."

Source : Equity Bulls

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