Nifty Rollover Falls, But Telecom, IT, Infra Sectors See Open Interest Addition; Broader Markets Offer Opportunities

Nuvama Alternative & Quantitative Research reported that the rollover percentage for the October series of Nifty futures declined to 76%, lower than the average of 81% seen in the past three series and 82.6% in September. The six-month average rollover stands at 79.4%. Despite this moderation in futures rollovers, the report highlights a notable addition of open interest in the telecom, IT, and infrastructure sectors at the beginning of the November series.

Historically, November has been a positive month for Indian equities, with the Nifty showing an average gain of 1.6% over the last decade, though the success rate is around 50%. The Nifty Bank has demonstrated stronger momentum, with average gains of 3.5% and an 80% hit rate, suggesting a potential continuation of the strong performance seen in October.

However, with the Nifty trading near its all-time highs, Nuvama anticipates some moderation in the benchmark index's performance. The research firm sees more compelling investment opportunities in broader market indices. The Nifty Next 50 is approximately 12% below its peak, and the Nifty Smallcap is about 6% off its highs, while the Nifty Midcap has already reached new all-time highs.

**Impact** This news is significant for Indian stock market investors as it provides insights into market sentiment, potential sector rotation, and identifies specific segments like mid- and small-cap stocks that might offer better investment prospects. The decline in rollover percentage could signal caution among some traders, but sector-specific open interest additions suggest targeted optimism. The outlook for rangebound movement in the Nifty, coupled with opportunities in broader markets, can guide investment strategies. Impact rating: 8/10.

**Definitions** * **Rollover Percentage**: In futures trading, this refers to the percentage of open positions from an expiring contract month that are moved or 'rolled over' to the next contract month. A lower rollover can sometimes indicate reduced conviction or participation. * **Open Interest (OI)**: The total number of outstanding futures or options contracts that have not been settled or closed. An increase in OI along with price movement can suggest stronger conviction in that direction. * **Benchmark**: A standard or index against which the performance of a security, fund, or investment manager can be measured. For India, the Nifty 50 is a primary benchmark. * **Broadening of market participation**: This means that market gains are no longer concentrated in a few large stocks (frontline stocks) but are spreading to a wider range of companies, including mid- and small-caps. * **Risk-reward opportunities**: The potential return an investment might offer relative to the risk taken. Better risk-reward means a higher potential return for the level of risk involved. * **Fundamentals**: The underlying economic or financial factors that affect the value of a company or asset, such as earnings, revenue, management quality, and industry trends. * **Rangebound**: A market condition where the price of an asset trades within a defined upper and lower price limit, without making significant new highs or lows.