Nifty on a roll, likely to cool off ahead of Q1 show

MUMBAI: Power and construction shares may beat the Nifty in July if trends in the rollover of June derivatives contracts are any indication of what is in store for investors. However , scandal-hit telecom stocks will remain under pressure. The Nifty might cool off in the July series ahead of the quarterly results . The Nifty witnessed 67% positions from June derivatives getting shifted to the July series against 60% seen in the previous expiry.

Market-wide rollovers were at 77% compared with 73% in last expiry. This is in line with the average of 76% rollovers seen in the past four expiries. "Some amount of cooling is expected in the July series after the recent rise and the Nifty may continue to trade in range between 5400-5730 levels ahead of the first quarter corporate results," said Yogesh Radke, head-quantitative research, Edelweiss Securities.

In the past five trading sessions , foreign institutional investors have poured more than Rs 3,500 crore into Indian equities. The Nifty has risen 7% in the past one week. "This is a very difficult market to trade," said a broker. "Exchange traded fund money has not yet come into the system, if that happens Nifty will touch 6000 in less than a week," he said.

However, a section of the market continues to be cautious after the recent surge. "The Nifty is forming a lower top pattern and the fall could be severe all the way down to 5000 levels. Traders squared off their short positions and did not roll them over, so the view remains skeptical as the Nifty may remain volatile in the coming days with more bias on the downside," T Harihar, head-institutional derivatives , ICICI Securities, said. Sectors that can perform well include defensives such as the FMCG sector.