By Anand James
Nifty 50 ended the February series on a negative note with Software & Services being the biggest laggard followed by Oil & Gas. Banking & Finance was the best performing sector followed by Metals & Mining this month. In February, only 17.06% of stock futures closed positively, a decrease from 25.11% in January. Meanwhile, February 2024 saw almost four times the positive closing rate of 65%.
Highest rolls were seen in Crompton, United Spirits, JSW Steel and Godrej Consumer Products while lowest rolls were seen in Manappuram, Berger Paints, Escorts and Supreme.
Sector-wise, healthcare, oil & gas, cement, and banks saw the highest rollovers, while chemical and infrastructure had the lowest. We saw the highest long buildup in consumer durables, chemicals, telecoms, and metals, signalling optimism in these industries.
Going into the expiry week, we had noted that rollovers of both Nifty and Bank Nifty were at the lowest in the last three months. It appears that traders were waiting for the last moment possible before deciding on whether to roll over not. Incidentally, at 83.5, Nifty had the highest rolls in the last three months. Bank Nifty’s rollover was 81.64%, up from 79.13% in January.
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Since 2014, Nifty 50 has experienced 15 instances of two consecutive months of negative closing. In 60% of these cases, the third month showed a positive return, averaging 5%. Additionally, since 2004, Nifty 50 has seen 7 instances where both January and February had negative returns, with 70% of these instances resulting in an average 6.4% return in the following March.
However, the Midcap and Smallcap indices tell a different story. Since 2016, when the Nifty Midcap150 and Smallcap250 indices experienced two consecutive months of decline, more than 70% of the time, the following month saw an average return of 8%. Conversely, when both January and February had negative returns since 2016, more than 50% of the time, both indices saw negative returns in March.
Since inception, this is the second time Nifty 50 has fallen 5 months in a row after 1996 when Nifty50 declined 26% and took 3 months to recover 75% of the decline.
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