ROLLOVER ANALYSIS. REMAIN BULLISH AND USE ANY CORRECTIONS TO ACCUMULATE LONG POSITIONS WITH SL OF 18000: HDFC Sec

STOCK FUTURES OPEN INTEREST ON THE LOWER SIDE – AUGURS WELL FOR THE MARKETS. UPSIDE TARGETS FOR NIFTY ARE AT 19100 FOR THE DECEMBER SERIES

• Nifty started its upward journey from the very first day of the November series and continued throughout the series and ended the November series at highest point. Nifty finally ended the November series with gains of 4.21%.
• Bank Nifty, which started outperforming since July series, continued its out performance during the November series also where it gained 4.3%.
• In the Stock futures’ segment, we are starting the December series with slightly lower Open interest of 467 Cr shares as against 469 Cr shares at which we had begun November series. While the open interest is lower as compared to last series, it is also lower by 11% as compared to all-time high Open Interest of 523 crs which was seen in February 2018. This lower OI indicates that markets are light in terms of positions, despite Nifty near all time highs, which augurs well for the market going forward.
• We are starting the December series with higher Nifty future OI of 1.22 Cr shares as against last series OI of 1.18 Cr shares. This OI is still 41% lower of the last 17-year average OI of 2.08 Cr shares.
• We are starting the series with higher Bank Nifty future OI of 32.92 lakh shares as against 18.92 lakh shares last series. This is the highest since March 2022. It is also higher by 28% as compared to last twelve series average open interest of 25.7 lakh shares.
• We have seen in line rollover of 92% in the stock futures segment as compared to the last 3 series average rollover of 91%.
• Rollovers of Nifty and Bank Nifty Futures to the December series were higher at 82% and 88% (1.22 Cr/32.92 lakh shares) as against last series rollover of 76% and 77% (1.18 Cr/ 18.92 lakh shares) respectively.
• Maximum open interest in Nifty Monthly Put options (29 Dec Expiry) is at 18000 strike (35.22 Lakh shares) and maximum open interest in Call options (29 Dec Expiry) is at 19000 strike (30.74 Lakh shares) followed by 18500 strike (21.91 lakh shares) .
• FIIs’ Long to short ratio In Index Future at the beginning of the December series is at 3.28 Vs 1.45 Last series. This is the highest since June 2021.

To Sum it up, Lower stock Futures’ Open Interest (compared to all time highs), Lower Open Interest in the Nifty Futures’ as compared to last 17 year average OI of 2.08 Cr shares despite Nifty near all time highs, FIIS long to short ratio in the Index Futures at 3.28 (Aggressive Long build up by FIIS in the Index Futures segment), aggressive Put writing at 18000 levels and strong recovery in the global markets from the recent lows indicates that downside is limited in the Nifty and one should remain optimistic for the December series also.
Technically too, Nifty is in strong uptrend as it is trading above its all important short term and medium term moving averages. And Nifty has also been trading above a downward sloping trend line that has held down the highs of 2021 and early 2022.

Therefore, our advice for traders is to remain bullish and use any running correction towards 18200 levels to accumulate long positions with the stop loss of 18000 levels. On the higher side, 18500-18600 levels would act as an immediate resistance. A move above 18600 could trigger short covering with fresh long build up which could take the Nifty towards all time high levels of 19100.

In the Bank Nifty, which has been outperforming the Nifty since last five series, our advice is to accumulate long positions on decline with the stop loss of 41900 levels. On the higher side 43500-44000 levels may act as an immediate resistance going forward. A move above 44000 could trigger short covering with fresh long build up which could take the Bank Nifty towards 45000 levels