Oct seasonality favours bulls; dips towards 19,000 will likely be bought into

Seasonality in October clearly in favour of bulls

A seasonality check of last 10 years shows the Nifty gave a positive return of 2.93 percent with the index closing positive 90 percent of the time. On the other hand, the Bank Nifty gave an average return of 6.24 percent with the index closing positive 100 percent of the time. So seasonality is clearly in favour of bulls.

Market-wide rollover remains at a three-month high of 6.72 bn while rolls percentage was also high at 93 percent.

In September 2023 series, the Nifty ended 1.4 percent higher at 19,524, with the series ending on a profit booking note despite hitting all-time highs. The momentum remained with the bearish camp in the second half, while the VIX closed at 12.8-level as it spiked 6 percent from the previous series close with a larger spike witnessed on expiry day.

The Index faces immediate resistance at the 19,800-19,900-zone while from a positional perspective, the Index faces resistance at 20,100-mark. The Index has formed lower highs since the September 15 a bearish engulfing bar coupled with Tweezer Top formed on the weekly chart. However, the larger degree charts still depict a higher high higher low formation with 19,200-19,000 as a critical trend pivot.

The index has witnessed a corrective reaction in this series, and it needs to stage a price intense move above 19,800-level as sustaining above this level can provide the Index a much-needed breather from the volatility we witnessed in the last few weeks.

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Viraj Vyas

Technical & Derivatives Analyst - Institutional Equity|Ashika Group

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Expiryday moves resembled profit-taking but lacking intent to cross the resistance or an extended consolidation below the same is likely to result in deeper corrective action. The index has just managed to close above the 13-week EMA (19,459), which has held as good trend filter and closing below the same might trigger deeper sell-off. We continue to be in a secular uptrend and any dips towards 19,000-levels will likely to be bought into.

Rolls for the FIIs on a net basis stands at contracts 57,279 (net-short) versus 1,694 (net long) contracts in the previous month, while their short positions at the start of new series stand at 59 percent versus 49 percent sequentially, mainly on the back of higher long unwinding and short addition. DII net long has declined at 41 percent versus 51 percent sequentially as they too booked profits during September series.

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