By Anand James
The Nifty 50 ended the October series on a negative note with the auto and realty sectors being the biggest laggards. The highest rolls were seen in Alkem Laboratories, PEL, Indian Hotels, and ITPC while the lowest rolls were seen in India Mart, RBL Bank, Berger Paints, and PNB. The highest rollover was seen in energy and pharma while the lowest rollover was seen in healthcare. Nifty rollover for the month of October came in at 72.87% which is below the 3-month average of 76.39%. Bank Nifty rollover stood at 69.36% compared to 66.88% in September expiry. Only 11.8% of stock futures closed positively in October compared to 66% in September. But, it is in line with October 2023, which also saw low future advances at 23%. We saw a long buildup in banks, chemicals, and realty stocks while significant shorts were seen in the sector.
Muhurat Day gives mixed signals
Though Nifty and stocks advanced, there was a lack of follow-through buying in Nifty futures and call options, while VIX advanced 2.2%. Though this can be attributed to restrained participation in the f&o segment in a truncated trading session, it also points to the event-filled first week of November that would see several US data releases as well as US elections and Fed decisions.
Nifty: Expect new trading ranges
Supports came to the rescue of Nifty multiple times last week with 24300-150 region thwarting all collapse attempts. But clearly, a lack of upside momentum is visible, with the 24470-540 region remaining a stiff barrier. We will need this region to overcome in order to get assistance from short covering. The 24660-770 are the immediate resistances above, but we will require multiple days of close above 25100 in order to fully abandon the sell-on-rallies approach that continues to be the dominant theme. Alternatively, a fall back below 24150, will expose 23900-23300. Either way, Nifty appears to move out of the 23150-470 region this week.
History favours Pharma: Since rising from 2023 lows in March, the index has seen three instances of 30-33% upside followed by a 7-7.5% correction. The third instance was completed in October 2024 and if history is to repeat, we are staring at the possibility of another 30% upside (7100) for Nifty Pharm index in the next few months. Also, the Relative Strength Index is hovering close to the oversold region.
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