Nifty April rollovers lower at 65%. Check how FIIs are positioned for May
April rollover for the Nifty Index futures were lower at 65.12%, significantly lower compared to the previous month's 69.77% and the three-month average of 71.40%, states a report by SBI Securities.
April rollover for the Index futures were lower at 65.12%, significantly lower compared to the previous month's 69.77% and the three-month average of 71.40%, states a report by SBI Securities.The most likely reason attributed to the lower roll-overs could be the expectations of volatility ahead of the ongoing general elections. Compared to the previous trends during the past election years of 2009, 2014, and 2019, the current rollover is lower than the rolls in April 2009 and 2019 where 74% and 81% rollover of positions were witnessed. April 2019 Series, however, saw Nifty rolling over lesser positions to the tune of 59%.
The rollover cost has also declined to 0.31%, which is lower compared to the three-month average of 0.72%.
As for the banking benchmark, Bank rollovers surged over 2%, outperforming frontline indices, despite a decrease in futures’ rollover to 74.41% from the previous month's 87.21% and a drop in rollover cost to 0.43% compared to the three-month average of 0.94%.
Despite the decrease in rollovers for the April 2024 Series, historical data from April 2009, 2014, and 2019 shows that the current rollover rate for Bank Nifty remains higher, standing at 74.41%, compared to 69%, 69.87%, and 74% for those respective years.
Outlook for May
Nifty
The trend observed during the last three election years for May (2009, 2019 & 2014) was particularly striking, where the Nifty has recorded an impressive average return of 11%.
Over the past 17 years, May has typically shown a bullish trend for Nifty. Out of 17 instances, 10 resulted in positive gains averaging 4.94%, while 7 ended with losses averaging 4.27%. Overall, the average return for the May Series stands at 1.15% for Nifty.
Bank Nifty
In May, the Bank Nifty has demonstrated an average volatility of approximately 13% for the past 17 years. Notably, during the last three election years in May, it has delivered a remarkable average return of 21.42 percent, highlighting its strong performance for the month of May in the past 3 election years.
The current long-short ratio based on FII index positions stands at 38.90%.
The April series showcased midcaps and smallcaps outperforming largecaps, with this trend likely to persist into May. Despite Nifty's flat performance, the derivative segment saw stronger market breadth, with 69% of single stock futures rising in April compared to 46% in March.
Sectors such as PSU Banks, Metal, CPSE, Chemicals, Consumer Durables and Auto are expected to outperform in the May Series while IT and Media could act as laggards.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Source: Stocks-Markets-Economic Times
