December F&O Series Begins: Key Events and Stocks to Watch

The December Futures & Options (F&O) series kicks off with Friday’s trading session. The Nifty index experienced a decline of 300 points in the November series, marking its 2nd consecutive negative F&O series. This follows a steep 2,000-point drop in the October series, which came after gains of 1,064 points in September and 746 points in August.

Nifty’s Historical Performance in December Series

Historically, the December series has shown mixed results for the Nifty, with no clear trend emerging. Over the past four years, the index has seen two positive and two negative series. Here’s a snapshot of Nifty’s performance in the December series over recent years:

• 2020: +995 points (+7.7%)
• 2021: -332 points (-1.9%)
• 2022: -293 points (-1.6%)
• 2023: +1,646 points (+8.2%)

Rollovers and Open Interest

After the November series, rollovers stood at a higher-than-usual 79.3%, compared to the three-month average of 70%. This indicates stronger participation in the rollover of positions into the December series.

Rollovers by Month

• December: 79%
• November: 68%
• October: 65%
• September: 77.5%

Meanwhile, at the start of the December series, the Open Interest for the Nifty was recorded at 1.18 crore shares, which is higher than the 1.06 crore shares seen at the start of the November series, reflecting increased market participation.

Open Interest by Month

• December: 1.18 crore shares
• November: 1.06 crore shares
• October: 1.14 crore shares
• September: 1.32 crore shares

Foreign Institutional Investors (FII) Activity

The long position ratio for Foreign Institutional Investors (FII) at the beginning of the December series is 33% net long, which is an increase from the 22% recorded in November but still significantly lower than the 80% seen in October.

FII Long Exposure

• December: 33%
• November: 22%
• October: 80%
• September: 70%

Key Stocks to Watch

Several new stocks have been added to the F&O segment, including Avenue Supermarts, BSE, Zomato, and CDSL. These additions may attract investor interest as the December series unfolds.

Key Events to Watch

• RBI Policy Outcome: On December 6, the Reserve Bank of India will announce its policy decision. While rate changes will be closely watched, the focus will be on commentary regarding future policy actions and updates on GDP growth and inflation forecasts.
• Geopolitical and Global Factors: The market will continue to monitor geopolitical events and global news for any potential impacts on sentiment and market movements.

Low Global Liquidity

As the year winds down, global liquidity is expected to remain lower, with many foreign institutions going on holiday towards the end of December. This could lead to less trading volume and volatility.

Santa Claus Rally?

A much-anticipated Santa Claus rally is often observed in December when markets see a seasonal uptick. The likelihood of such a rally will be closely monitored throughout the month, as investors hope for a positive end to the year.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.