Nifty rose 8.17% during the December month expiry. Nifty futures rollover stood at 79.54%, which is higher compared to last month’s expiry rollover of 73.06% and its three/six/nine months average of 78.64%,79.07% & 76.30% respectively. Rollover is a process of carry forwarding an existing position from one month to another month. A high rollover indicates a strong sentiment while a lower rollover is usually considered as a sign of weak sentiment.
Nifty will start the January series with an open interest of 1.38 crore shares compared to an OI of 1.07 crore shares at the beginning of the December series. Nifty saw a higher rollover with a higher cost of carry (+0.68%) and a rise in open interest, compared to its previous month, indicating buildup of fresh long positions in December series.
INDIAVIX, known as the fear indicator, rose 19.31% in the December series and closed at 15.14. The India VIX is used by the traders to assess mood of the market. A higher VIX indicates greater market instability while a lower VIX suggest increased market confidence. The Foreign Portfolio Investors (FPIs) Long Short ratio rose from 35.75% on 30th November to 69.55% on 28th December, as the FPIs built long positions in Index Futures. The FPIs have a great influence on the Indian markets, and it is important to keep a track of their activity in Indian markets. FPIs covered their short positions in Index futures on the last day of the December series suggests that the ongoing strong bullish momentum is likely to continue as we head to the January series. The Put-Call Ratio, a sentiment indicator, too, rose sharply from 1.19 on 30th November, making a high of 1.40 on 27th December before closing at 1.21 on the last day of December series expiry, indicating put writers’ dominance. A higher put-call ratio indicates that the markets are overbought while a lower put-call ratio indicates that the market is in an oversold territory. The put writers (bulls) overpowered the call writers (bears) throughout the December series.
On the Options front in the January monthly expiry, the 21,000 Strike put option has highest open interest with 37,66,700 contracts followed by the 20,500 Strike put option with 34,52,650 contracts. The Strike prices with maximum put open interest are the support levels. While on the call side, the 22,000 call has highest open interest with 23,39,100 contracts followed by the 21,500 Call strike with 15,27,800 contracts. The Strike prices with maximum call open interest are the resistance levels.
Nifty had a stellar run in the December series expiry rising a whopping 8.17%. This by far was the best month for the Index in 2023, the previous best being the month of November where it gained 5.52%. Nifty has gained 20.29% for the calendar year 2023 (30th December 2022 to 28th November 2023). Nifty has been moving in a higher high higher low formation since last nine weeks. Nifty faced strong resistance around the 21,000 levels first on 12th December and then around the 21,600 levels on 20th December. The selling pressure was short lived on both the occasions and Nifty bounced back sharply. The bulls remained unfazed, exhibiting no signs of discomfort, even as the India VIX surged by 19.31% during the December expiry. Nifty is likely to move towards the 22,000 levels, unless there is a consecutive lower close on the daily chart accompanied by robust call writing (strong resistance) at higher levels. The level of 21,500, which acted as a strong resistance for Nifty in the December month, is likely to act as a support in the upcoming January series.
