By Manojh Vayalar
This November series so far has been on an optimistic tone for both the Nifty and Bank Nifty, triggered majorly due to lesser short positions by FIIs in the Index with respect to last month. Usually, the FIIs have around 60% longs and 40% short positions in the Index at the start of a new series with the Risk index also named the VIX being in a 16-18% range. However, it was in the Oct series that we saw almost 80% shorts by FIIs and around 20% longs; October had its share of correction too eventually. Further, some buying in the cash market in the last 10-12 days by FIIs has boosted the sentiment too.
However, for the November series FII startedwith 60% long positions and the VIX for the first time slipped below 16%. Inadvertentlyit is usually a traitin the Equity derivative Instrument we usually see that such new levels of dip in the Vix after a long haul is usually followed with higher premium in the Index futures w.r.t Spot in the correspondingmonth. The Nifty Vix is at 14.5% and we expect Nifty to be more range bound in the coming days as well. The Nifty Month on Month has been positioned long at around 18000-18050 levels so we expect these levels to be very strong support for the Nifty.
With Nifty around 29% and Bank Nifty 31% in terms of Rollovers into the December series so far, we expect Nifty might be range bound. The major range till expiry might be around 18100-18500 for the Nifty and 42000-43000 for the Bank Nifty. Bank Nifty’soutperformance might trigger a stronger momentum and lead the Nifty towards18600-18800 levels in the December series.
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Bank Nifty has been outperforming the index in the last two months and we expect it might continue. With 41000 as a very strong support the Index has resistance around 43800 levels positionally. Sector-wise, we believe Banks, IT along with Automobile and Select Pharma stocks might outperform in the coming series. The stocks to watch might be Tata Motors, NMDC, Cipla, Mahindra and Mahindra (M&M) and ICICI Bank.
(Manojh Vayalar is VP – Derivatives Research, Religare Broking. The views expressed are the author’s own. Please consult your financial advisor before investing)