The rollover in Nifty is slightly higher than its 3-month average. However, FII’s have more shorts in the index futures segment at the start of the new series, Ruchit Jain, Senior Analyst - Technical and Derivatives, Angel Broking Ltd, said in an interview with Moneycontrol’s Kshitij Anand.
edited excerpts:
Q) It was a stellar month for D-Street, both Sensex and Nifty closed with gains of about 4 percent, while the broader markets underperformed. What led to the price action on D-Street?
A) October started on an optimistic note with a gap-up opening. The first half of the month saw a swift up move in Nifty and this time, the Bank Nifty too joined the momentum to lead the market to its seven-month high.
However, the second half turned out to be a bit volatile owing to the increase in volatility in global markets. This was mainly due to the surge in COVID-19 cases in Europe due to which Germany and France announced fresh lockdown measures.
Also, uncertainty ahead of the US elections led to a rise in volatility and thus the broader markets witnessed a relative underperformance.
Although we gave up some of the gains in the latter half of the month, the indices are still trading above its crucial support of 11,550-11,600 and hence, the trend has not been distorted yet.
Q) Any important events to track in the coming week, and how will they impact Indian markets?
A) The auto numbers at the start of the week will give us an idea about whether the auto sector has recovered growth momentum. Stocks from this sector could react on the numbers.
Then, the major event that lies ahead for the financial markets is the US elections. Markets have turned a bit volatile ahead of the event and India VIX has risen in the last few sessions.
A rise in VIX is usually not good for the market and thus, short-term traders should keep a tab on the same. However, we are still above the crucial supports and until those are breached, the trend continues to be up.
Q) From a technical perspective, what is your outlook on markets and important levels to track in the coming week?
A) The Nifty has retraced the recent up move from 11,790 to 12,025 by 38.2 percent. Thus, 11,550-11,600 would be seen as an important support for the coming week.
If this support range is breached, then we would see further correction upto 11,400. On the flipside, 11,800 followed by 12,000 are the short-term resistance for Nifty.
As long as the support zone of 11,550-11,600 is intact, we remain hopeful of some recovery in the coming week.
Q) Based on the October series expiry what is your expectations from the November series? Do you see Nifty50 reclaiming 12,000-12,400 levels?
A) The rollover in Nifty is slightly higher than its 3-month average. However, FII’s have more shorts in the index futures segment at the start of the new series.
Given the elections, how FII’s build-up further positions in the next few sessions would be crucial to determine the near-term trend.
If the index manages to hold its support of 11,550-11,600 and FII’s start covering their shorts and form longs, then we could see Nifty reclaiming the 12,000 mark in the coming series.
Q) Small & midcaps underperformed in October. Do you think with the economy getting more stable, we could see some outperformance in November?
A) The Nifty Midcap index has been going through a consolidation which seems to be a time-wise correction. The Nifty Midcap 100 index has immediate resistance in the range of 17,300-17,400.
A breakout above that would result in the next leg of the up move. Traders can look for opportunities from this space if the index breaks the above resistance.
Q) Any 3-5 short term trading ideas for the next 3-4 weeks?
A) Here is a list of top three trading ideas for the November series:
After some consolidation above its 200-DMA, the stock gave a breakout from falling trendline resistance. This stock can be bought at Rs 590 with a stop loss below Rs 578 for the near-term target of Rs 628.
After a consolidation phase, prices have resumed its uptrend with a ‘Higher Top Higher Bottom’ structure.
This stock can be bought at CMP of Rs 1,570 with a stop loss below Rs 1,512 for a near-term target of Rs 1,650-1,670.
The short-term trend seems positive with its 20-DEMA acting as a support. This stock can be bought at Rs 410 with a stop loss below Rs 395 for a near-term target of Rs 435.
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