- Foreign investors' net Nifty index-futures shorts rise to about 267,000 contracts from 184,000
- Brokerages see 22,350-22,500 as key Nifty 50 support zone
- Rebounds may prove temporary, with resistance at 23,300-23,400
- Nifty, Bank Nifty rollovers indicate bearish bets carried forward
Sept 30 (Reuters) - India's monthly equity derivatives expiry on Tuesday signalled a risk-off turn, marked by broad unwinding of bullish positions, a fresh buildup of shorts and heavier foreign investor selling as markets grapple with a global bond rout, brokerages said.
The benchmark Nifty 50 fell 6.7% during the September derivative series, making it the worst performer among Asian markets. The Bank Nifty declined 5.7%, contributing the most to losses in the benchmark.
The rollover data point to a cautious market heading into October. Bearish bets were not merely built during September's selloff, but also largely carried into the new series, according to three brokerages.
IIFL Capital sees scope for a bounce towards 23,300 as the Nifty approaches the 22,500 level. However, it cautioned that a sustained break below 22,400 could open the door to more losses.
Nuvama Alternative and Quantitative Research sees the benchmark between support at 22,350 and resistance at 23,400, despite favourable seasonal trends.
The September derivative series saw broad-based selling and heavy bearish bets by overseas investors, analysts at Ambit Capital said, as nearly half of stocks for which futures and options are available ended with long positions unwound and more than 40% saw a buildup of shorts.
With Nifty futures open interest steady, Bank Nifty rollovers above average and foreign investors increasing index-futures shorts, any near-term rebound is likely to face selling pressure, according to IIFL, Nuvama and Ambit. The only caveat analysts pointed to is if global sentiment improves.
Nifty rollovers stood at 74%, in line with the three-month average, while Bank Nifty's 79% rollover was marginally above the average of 78%.
Nifty futures' open interest rose nearly 30% from the start of September, which IIFL says suggests "heavy shorts".
Foreign institutional investors' net index-futures shorts rose to about 267,000 contracts from 184,000 at the previous expiry, data from Nuvama showed. Overseas investors have sold $2.7 billion of Indian shares in the spot market, pointing to a broad-based selloff.
Domestic institutional buying cushioned some of that pressure as retail investors stayed long on stock futures, in a sharp divergence between foreign and domestic positioning, Nuvama said.
Reporting by Bharath Rajeswaran in Bengaluru; Editing by Mrigank Dhaniwala and Ronojoy Mazumdar
Source: Reuters