By Anand James
The decline in VIX continues with Friday witnessing a close of 13.3, the lowest close since July. While this has meant that trading ranges are excruciatingly low traders have appeared quite comfortable with such lofty prices for extended periods. Vertical rise in Nifty in the last 45 minutes of the expiry has brought in cheers as 68% of the stocks in the F&O segment ended the day within 1% of the day’s high. For the November expiry, while there was a good amount of long buildup in IT stocks, there was an equal distribution of long and short build-up in the healthcare sector.
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Banks, Capital goods, Cements, Metals, and Financial services were among the sectors with short covering. Media stocks saw high rollover compared to the previous two series. Among sectors, Financial Services, Oil&Gas, Banking, and IT stocks contributed ~80% to Nifty’s gain in November. Among stocks, highest rolls were seen in ATUL, Max Financial Services Limited, IndusInd Bank, Ultratech Cement, Oberoi Realty, MCX and Reliance, while lowest rolls were seen in Torrent Power, ONGC, Polycab India, Alkem Laboratories, HCL Technologies, Idea, and LIC Housing Finance.
December series should take these vibes forward, but visibility past 18800-19000 for Nifty is limited, even though a collapse is less likely. However, a pullback below 18470 could force a rethink, bringing 17850 back in the reckoning. Meanwhile, Bank Nifty’s recent move is replete with continuation patterns, hinting at extension in uptrend. However, an evening star pattern in 4 hr charts hints at exhaustion prompting us to pull up the downside marker to 42600 for the week, while playing a 43800-43970 view on dips.
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Meanwhile, USDINR looks rejuvenated after a week-long consolidation. As long as 81.35 holds, we might be in for an 82 to 82.2 move, which could set the bias strongly upwards. In other words, the benchmark indices look good for a pause, while rupee look set for some weakening. It is no surprise, as the week ahead could undo the dovish rate expectations that we have been riding on, as we have US non Farm payrolls as well as Fed chair Jerome Powell’s speech scheduled for next week.
(Anand James, Chief Market Strategist at Geojit Financial Services, Views expressed are the author’s own. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)