On Thursday, when the NSE's May contracts expired, traders cut their bearish bets and carried forward bullish positions, helping the benchmark indices eke out gains in a late rally after trading lower for most of the trading session.
Shutterstock.comAt home, the Nifty gained 2.2% in May series and briefly surpassed the 18,400 levels. The levels of 18,170-18,200 are crucial for the Nifty and failing to sustain above these could lead to a sharp and quick decline, said analysts.
Mumbai: Traders carried forward bullish bets on Nifty futures to the June series on optimism over US debt ceiling talks as the June 1 deadline for raising the debt ceiling approaches.
On Thursday, when the NSE's May contracts expired, traders cut their bearish bets and carried forward bullish positions, helping the benchmark indices eke out gains in a late rally after trading lower for most of the trading session.
The ongoing negotiations between the White House and the US Republican politicians on raising the debt ceiling has kept market participants on the edge though expectations are high that a last-minute deal would happen.
About 71% of Nifty futures contracts were rolled over to June, compared with 64% into the May series and three-month average of 70%, according to stock exchange data.
Outstanding positions, or open interest, in Nifty futures as on Thursday was at ₹169 billion or 9.23 million as against ₹160.55 billion or 8.96 million at the start of the May series, according to IIFL Alternative Research.
"The light open interest structure in the Nifty and Bank Nifty futures augurs well in terms of market positioning," said Sriram Velayudhan, vice president, IIFL Securities. "Once the US debt ceiling impasse is resolved, risk assets could get a boost. The current up move that commenced in March has more room on the upside."
Data also showed traders paid 53 basis points (bps) to carry forward Nifty futures into the next series compared with 47 bps in the previous series.
"Traders holding onto bearish positions squared off their trades and exited the system in the closing stages of Thursday's trading, resulting in the markets to recover," said Chandan Taparia, VP - equity derivatives and technicals, Motilal Oswal Financial Services.
Bank Nifty rollover to the June series stood around 79% compared with 82% in the previous series and the three-month average of around 87%. Cost of carrying Bank Nifty futures stood at 10 bps as against 2 bps in the previous series.
While the recent focus so far has been the US debt ceiling crisis, the spotlight is shifting to Europe, where Germany -the continent's largest economy - slipped into a recession. As a deep slowdown in some of the developed economies set in, investors are asking how long will the central banks keep interest rates high to bring down inflation.
At home, the Nifty gained 2.2% in May series and briefly surpassed the 18,400 levels. The levels of 18,170-18,200 are crucial for the Nifty and failing to sustain above these could lead to a sharp and quick decline, said analysts.
"In the May series, the Nifty gained 2% while moving in a range. The index held onto the gains while resisting selling pressure. This gives confidence to the market and we see Nifty's trading range shifting higher between 18,100 to 18,600 in the near-term," said Taparia.
Shutterstock.com
Get Unlimited Access to The Economic Times
