1. Stocks Take a Knock Again, Rollovers Rise
Key benchmark indices declined for the second straight day fuelled by negative global
cues on fear that the Federal Reserve may reduce the stimulus package following a
better-than-expected US economic data. Index heavyweights also continued to
disappoint on the earnings front.
While the Sensex fell 1.42% to 19804.76, the NSE Nifty declined 1.39% to 5907.20 on
Thursday led by losses in FMCG, power and metals on the settlement day of the July
series expiry.
The market is likely to remain weak in the near term and will take cues from the
Reserve Bank of India’s policy meet on July 30, say analysts.
“Considering the pace of decline and predominant bias, markets will continue to
remain under pressure and extend its declining streak for the next probable target of
5800. Any technical bounce to the 5950-6000 zone can be utilised as fresh shorting
opportunity,” said Jayant Manglik, president-retail distribution, Religare Securities.
“Going forward, markets would now focus on upcoming monetary policy meeting at
the end of the month for clues on the future direction of interest rates,” said Sanjeev
Zarbade, VP- private client research, Kotak Securities.
The benchmark indices ended the July series at 5907 as longs unwound their positions
over the weak earnings growth of big companies. The Nifty has gained around 5% in
this series and above average rollovers indicate increased market participation ahead of
the July 30 Reserve Bank policy meet. “The highlight of the day was banking stocks
which witnessed long rollovers after Wednesday’s washout. The only saving grace was
select telecom and auto stocks which bucked the negative trend,” said Amar Ambani,
head of research, India Infoline.
Both market-wide and the Nifty index witnessed strong rollovers. Market-wide
rollover on the last day stood at 77% as compared to the average rollovers of 68% (for
the last three series). Nifty rollovers stood at 76% compared to the average rollovers of
57%. Roll levels (85-90bps, cost to long rollers) in stock futures continued to expand.
“As we have been highlighting, given the high currency hedging and funding cost, roll
cost stayed at elevated levels in this series. The August series will start with market
wide future OI of Rs. 39,900 crore as against Rs. 32,600 crore seen at the start of the

2. July expiry,” brokerage firm Edelweiss said in a note.
Index heavyweight and cigarette major ITC declined 4.6% to Rs. 358.80 post result as
the company’s revenue growth in the quarter ended June 2013 was below market
expectations.
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