Indian stock market: April F&O series ends with modest gains, offering limited arbitrage gains

livemint.com:

₹3.98 lakh crore against nearly ₹3.87 lakh crore at the start of the April series, according to the brokerage firm. Single stock futures rollover stood at 84 per cent in the April series which was lower than its three-month average of 93 per cent. Single stock futures open interest stood at ₹3.59 lakh crore as compared to ₹3.34 lakh crore at the start of the April series, JM Financial said.

Arbitrage trading in futures and options is popular among market participants. As brokerage firm Motilal Oswal explains, in stock-futures arbitrage, market participants buy in the cash market and sell the same stock in the same quantity in the futures market. As the futures price expires at the same price as the spot price on the F&O expiry day, the difference becomes the risk-free spread for the arbitrageur.

Nifty gained over a per cent in the April F&O series, but the mid and smallcap spaces saw robust gains. The Midcap index rose nearly 5 per cent while the Smallcap index jumped nearly 10 per cent in the April series. Foreign institutional investors (FII's) were net sellers to the tune of $2.7 billion, while domestic institutional investors (DIIs) deployed $4.5 billion in the April series, as per JM Financial data.