Nifty suffers worst loss in October series since 2008

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The bearish momentum of September series was seen in October series too as our market continued to make lower lows in the first fortnight of October expiry

The October series started on lighter positions as open interest (OI) in Nifty was at the lowest level seen in the last one year. The bearish momentum of September series was seen in October series, too, as our market continued to make lower lows in the first fortnight of October expiry.

However, we witnessed some relief rally in the latter half. But, the Nifty failed to sustain at higher levels and nosedived again below the previous swing low of 10,138.

The Nifty ended the October series with a massive loss of 7.77 percent over its September expiry. After October 2008, this is the biggest fall in the Nifty in an expiry month in terms of total losing points.

The fall was supported by fresh short positions and the same got carried forward to November series as rollovers in Nifty stood at 75.83 percent, which is above its quarterly average of 68.21 percent.

On a month-on-month basis, the open interest has increased by 28.34 percent. The foreign institutional investors (FIIs), too, participated in the ongoing fall as they turned net seller in cash market segment on almost all trading sessions (except two) in October series and cumulatively sold equities worth Rs. 25,528 crores.

They also formed a good amount of short positions in the index futures and as a result, their ‘Long Short Ratio’ in the index futures has fallen from 46.10 percent to 29.20 percent, which is at the lowest point in the last six months.

On the options front, 11,000 – 10,500 call writers are active; while we are witnessing decent writing in 10000 and 10200 put options in the November series.

Last two months were completely dominated by the bears as all the small bounces got sold into quickly. At current juncture, if Nifty manages to hold above 10000- 9950 level, then we may see some short covering bounce in the market in the coming days.

The BankNifty outperformed the benchmark indices as it corrected by around a percent in October series. We witnessed mixed positions getting formed in the banking index in October and most of them got rolled to November expiry.

The rollover in BankNifty (65.64%) is below its average of 69.77 percent, while it’s higher in percentage terms as open interest has increased by 23.48 percent m-o-m.

The banking index is expected to remain in the range of 24200 – 26000 in coming days and a sustainable move beyond this zone will decide the further trend in the index.

On stocks front, we are seeing long positions getting rolled over in very few stocks; while we witnessed huge short build-up in many heavyweights.

Stocks which added huge shorts and the same got rolled in next series are DHFL, Indiabulls Housing Finance, MindTree, BPCL, Grasim, Hexaware etc. among others.