The month of November turned out to be one of the best for the Indian equity market as the benchmark indices posted their best monthly return since April 2020.
The S&P BSE Sensex rose 11.4 percent while the Nifty50 rallied by 11.39 percent but the big action was seen in the broader market space.
The S&P BSE Midcap index rose 13.49 percent while the S&P BSE Smallcap index was up 13.3 percent in November.
On a weekly basis (from Nov 20-Nov 27), the S&P BSE Sensex rose 0.6 percent while the Nifty50 rallied by about 0.85 percent while the S&P BSE Smallcap index rallied over 4 percent, and the S&P BSE Midcap index rose by nearly 3 percent in the same period.
The market is teeming with positivity as FII inflow is soaring, reports suggest that a vaccine for COVID-19 is not far and the September quarter GDP prints showed that the economy is on track to come out of the dark tunnel.
However, there may be some correction in the market as it is near the record highs.
"Market is awaiting outcome major events like RBI policy meeting, the release of manufacturing and service PMI and banking business data which will be decisive factors driving the market in the coming week," said Vinod Nair, Head of Research at Geojit Financial Services.
Let's take a look at how top analysts foresee the mood of the market for the coming weeks:
In the coming month, we maintain our overall constructive stance with an incremental shift to broader markets as the Nifty is expected to undergo consolidation amid positive bias in the range of 12,800-13,200 after a sharp 14 percent rally in November.
A decisive move above 13,200 would signal an extended rally towards 13,600. Hence, we recommend utilising declines as an incremental buying opportunity as we do not expect the Nifty to breach its key support at 12,500 levels.
In line with our prognosis, Midcap and Smallcap indices have extended their up move after a higher base formation in September and October.
We expect both indices to witness acceleration in upward momentum and outperform the Nifty in coming months as Nifty Midcap and Smallcap indices have registered a resolute breakout from the three-year falling channel signalling resumption of the primary uptrend, further validated by robust market breadth.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services
The overall structure of the market remains positive, but intermittent profit-booking cannot be ruled out given the sharp rally in the past few weeks.
Technically, Nifty has to hold above 12,900 to witness a bounce towards 13,150-13,250 levels while the support exists at 12,800.
India VIX has also cooled down to below 20 levels, which suggests that positive momentum may continue and any decline could be bought in the market.
Globally, investors would watch out for Joe Biden's transition and the developments over stimulus announcement from the new US government.
On the domestic side, the market would react to the better than expected September quarter GDP data at -7.5 percent.
Auto companies would be in focus as November sales data would start coming from Tuesday (market remains shut on Monday). Banks and Financial stocks would be in focus as RBI’s monetary policy is scheduled on Friday.
Rahul Sharma, Head – Technical & Derivatives Research, JM Financial Services
Options data for monthly expiry reflects on 12,000 PE having max OI exposure (more than 25 lakh shares OI), followed by 12,500 PE/13,000 PE (nearly 20 lakh shares OI each).
For the weekly expiry, 12,800PE/12,900PE holds the highest OI concentration and equally have added fresh positions (more than 11 lakh shares OI).
CE writers on monthly expiry are active at 13,000 strikes, with 14,500CE being the most aggressive one (freshly added more than 6 lakh shares OI), whereas weekly expiry witnesses 13,500CE with the highest OI concentration overall and also the most active strike (more than 10 lakh shares OI added fresh), followed by 13,000CE (fresh additions of more than 8 lakh shares OI).
The data reflects on 12,750 to act as strong support and 13,000/13,100 to act as an immediate resistance, above which we can test 13,500 zones.
The broader trading range for the series in the index would be 12,500-13,500 going ahead.
As a strategy, we advise buying on dips and trade in sectors and stocks which haven’t relatively participated in the rally.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
Technically, post strong uptrend rally the Nifty has formed a Doji candlestick pattern which clearly indicates indecisiveness between bulls and bears.
However, the medium-term texture of the benchmark index is still bullish and likely to continue in the short run.
The Doji candlestick and intra-day charts formation indicate red flags near the 13,000 level. Hence, a strong possibility of quick intra-day price correction is not ruled out in the near-term.
For the next few trading sessions, 12,810 should be the sacrosanct level for the trend following traders.
If it sustains above the same then uptrend texture is likely to continue up to 13,050. And any further upside could lift the index up to 13,200 levels.
On the flip side, dismissal of 12,810 could trigger correction up to 12,700-12,650 levels.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The short-term trend of Nifty is choppy and the market is expected to move in a range of 13,100-12,800 levels by next week.
The study of long-term charts like weekly and monthly timeframe signal crucial overhead resistance for the market around 13,100-13,150 levels. The lower area of 12,850-12,750 is going to be an important base for the Nifty and a decisive move below this area could open a sharp downward correction in the market.
Nirali Shah, Senior Research Analyst, Samco Securities
Nifty closed the week with gains forming a spinning top candle at the rising channel resistance which hints that the rally is getting tired and may take a pause to consolidate its gains.
Outlook for the short-term is bullish but as the benchmark indices are trading overbought we suggest traders take a defensive stance and lighten the aggressive bets.
Immediate support and resistance are now placed at 12,750 and 13,150, a break below the support may lead to a retest of 12,400 and a break above 13,150 might open targets up to 13,400.
RBI’s MPC meeting is scheduled next week and market participants would want to take cues from the likely inflation trend and any upward revision of growth forecasts to plan their next move.
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