HEAD TECHNICAL& DERIVATIVES, CENTRUM BROKING
Where we are: The overall health of the market is much better than the last time it touched 12000 with wider participation after a strong foundation laid in the last few months. The Nifty 500 Index is placed very well and is expected to break out from its multi-month resistance of 9850. Last week, Nifty broke out from its five-day consolidation around 10600 and has given a comfortable close above major resistance levels. Bank Nifty has been an underperformer in October series, but is likely to play catch up in November.
What is in store: Nifty November rollovers have been the highest since August 2016 along with FII Index exposure being at four-month high both indicating a bullish outlook for November. On a weekly time scale, both the Nifty and Bank Nifty have closed well above their resistance levels which indicate continuation of current upmove. Key support level for the Nifty is seen at 11800 and 11715 whereas resistance is placed at 12100 and 12400. Option concentration is seen at 11600 Puts and 12000 Calls in the monthly expiry. India VIX has cooled down to 15.31 compared to October highs of 18.42. For Bank Nifty, 30000 should act as a base for this week and resistance levels of 30750-31500 could be tested soon.
What you could do: The triggers for November are expected to be October auto sales data, any possible government announcements on economy, divestment or tax, remainder of Q2 results and global news on trade and Brexit. Technically Nifty remains in a strong uptrend above 11700 and any intra-week dip can be utilised to create fresh long positions for a target of 12100 & 12400. Call Options of 12000 strike price of November monthly expiry can be bought to participate in the uptrend. Sectorally, BFSI, metals and FMCG are expected to do well along with midcaps. Stocks such as Bajaj Finance, Axis Bank and Tata Steel could do well in the near term.