Traders alert! Momentum expected to continue in broader markets with Nifty support at 12800
ICICI Securities believes only a move below 12800 may extend any profit taking. Otherwise declines remain a buying opportunity in the ongoing positive trend. Sectorally, after significant outperformance seen from BFSI and other non heavyweights, a round of profit booking cannot be ruled out. In such a scenario, performance can be expected from technology, pharma and FMCG stock.
The significant flows seen during the month pushed the Nifty above 13000. Volatility remained high last week as well. Despite a gain of just 1% in the index, broader markets saw significant movement. Midcap and small cap indices gained almost 3.5% and 5.5%, respectively. At the same time, FII flows remained buoyant in the Indian markets while the net figure for November is close to Rs 60000 cr. The December series has started with open interest of 11.5 mn shares while premium remained high suggesting some long additions.
However, such a high premium does not sustain in the market. Due to the long settlement week, one may see the Nifty hovering in a range with stock specific action in the midcap space. On the options front, immediate option positions are visible at 12800 Put and 13200 Call strike suggesting immediate range for the Nifty. ICICI Securities believes only a move below 12800 may extend any profit taking. Otherwise declines remain a buying opportunity in the ongoing positive trend. Sectorally, after significant outperformance seen from BFSI and other non heavyweights, a round of profit booking cannot be ruled out. In such a scenario, performance can be expected from technology, pharma and FMCG stock.
Bank Nifty: Upsides to be capped for coming week:
A sharp up move was seen in the Nifty as well as Bank Nifty on the back of positive inflows by FIIs where they pumped in almost Rs 15000 cr last week. However, Nifty future is trading above its sizable Call base of 13000 whereas the Bank Nifty is still far behind due to selling in a few private banks last week. Last week, there was a sharp rise in IVs as the Bank Nifty moved above 30000. However, Call writing in OTM strikes kept the index move in check.
The Bank Nifty started the December expiry with higher premiums whereas Call OI blocks were also there in private banks, which may limit upsides for the week. The price ratio of the Bank Nifty/Nifty remained near 2.28 levels as there was no major outperformance in banking stocks. For the coming week, the highest Call OI base is placed at 30000 strike followed by 30500 strike. However, no major Put OI build-up was seen for the coming week. ICICI Securities feel the Bank Nifty will retrace towards 29000. Unless ICICI Securities do not see closure in the 30000 strike Call, upsides could be capped in the index.
Significant FII buying helps Nifty to record new lifetime highs:
FII flows continued in emerging markets last week as well while India remains the biggest beneficiary of flows. Till date, November has seen close to US$8 billion FII flows, which is the one of the highest seen in a month. Despite range bound global markets, Indian indices continue to outperform and are currently one of the best performers in the world. Primarily, movement was seen in non heavyweights like midcap and small cap space. During the week, the volatility index (India VIX) has also moved up towards 23 levels but quickly came down below 20 once again. FIIs remained net buyers last week and poured another Rs 15000 cr in equities last week.
See Zee Business Live TV Streaming Below:
Major movement was seen in the non heavyweight space as a catch up exercise was seen across sectors among non performers. With MSCI rebalancing seen on Friday, significant blocks were seen among stocks like Kotak Mahindra Bank, Bajaj Finance and L&T. On the other hand, domestic institutions remained net sellers and sold almost Rs 13575 cr in equities during the week. Even in the F&O space, FIIs remained net buyers. While they sold worth Rs 1227 cr in index futures, they bought to the tune of Rs 1645 cr in the stock futures segment during the week. FIIs also bought index options worth Rs 4379 cr during the week. Rising cases of Covid-19 have hampered the ongoing recovery despite announcements of various Covid-19 vaccines. The fear of fresh lockdowns in many countries has halted the momentum across asset classes.
Stock specific action was seen in the current leg of consolidation in the Nifty near 13000. Few pharma stocks saw decent buying during the week where Cadila Healthcare made a new yearly high last week. For a couple of months, the stock has been rallying on the back of short covering. We feel the ongoing trend in the stock will continue. It was finding it difficult to sustain above 440 levels. However, as it finally closed above this level, fresh upsides could be seen in the coming week.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.