Investors awaiting national, global cues

Market Watch

• A short covering rally likely
• Monthly auto sales for Nov scheduled on Dec 1
• Exit poll predictions for 5 states on Nov 30
• Fall in US bond yields triggered renewed FII buying

NSE Nifty climbed 63 points to 19,795, and the Sensex rose 175 points to 65,970 points. The broader markets had a mixed trend as the Nifty Midcap index advanced 0.6 percent and Nifty Smallcap index was down 0.4 percent.

After a long hiatus, FIIs have net bought Rs1,473 crore worth of shares in the cash segment.While the net monthly outflow of FIIs is around Rs5,100 crore; DIIs buying was higher at Rs9,800 crore. Observers say that the indication that the US Fed may be done with the rate hikes after further all in US inflation and a fall in US bond yields from five percent to around 4.4 percent triggered the renewed FII buying. One of the most important factors on the domestic front will be the much-awaited exit poll predictions for five states namely Mizoram, Madhya Pradesh, Chhattisgarh, Rajasthan and Telangana on November 30, which will be released in the evening on November 30 after the voting in Telangana.

The voting in the other four States was completed last week. Near-term direction of the markets will be dictated by both the domestic and global macroeconomic data, international crude oil prices, rupee-dollar equation and cues from the speech of US Fed Chief Powell on December 1.

The primary market stole the spotlight last week, with a line-up of IPOs capturing investor interest. Tata Technologies IPO, as expected by the street, witnessed robust demand from all sections of investors. Investors on D-Street placed bids worth a total of ₹2.59 lakh crore in the five recently concluded IPOs.

The week-long bidding frenzy gripped investors as the five companies -Tata Technologies Ltd, Gandhar Oil Refineries Ltd, Fedbank Financial Services Ltd, Flair Writing Industries Ltd, and Indian Renewable Energy Development Agency (IREDA) Ltd sustained the IPO pulse in India’s primary markets.

All will be listing in T+3 timeline after closing their issues. IREDA is likely to list shares on November 29, and other four may be on November 30. These are tentative dates. The huge appetite for equities stems from the confidence that investors have in the India growth story and the large universe of fast-growing, well-managed companies, which expected to deliver good profits.The market will be shut on November 27 for Gurunanak Jayanti.

Quote of the week: Courage taught me no matter how bad a crisis gets. Any sound investment will eventually pay off — Carlos Slim Helu

Don’t despair amid the inevitable setbacks that all investors face, especially during a crisis in the market. If the reasoning behind the investment was sound, stick with it, and it should eventually turn around.

F&O / SECTOR WATCH

Renewed buying from FIIs triggered brisk volumes in the derivatives segment. It is pertinent to observe that the FIIs short exposure in index futures remains elevated at 77 percent, and the put-call ratio (PCR) stands at 0.99, suggesting the potential for a short covering rally. Looking at the monthly options data front, it can be seen that the maximum Call Open Interest is at 19,900 strike, followed by 20,000 & 19,800 strikes. On the Put side, the 19,800 strike witnessed the maximum OI, followed by 19,000 & 19,500 strikes. In the Bank Nifty, the highest Call Open Interest is at strikes of 44,000 and 44,500 whereas the highest Put OI is concentrated at strikes of 43,500 and 43,000. Implied Volatility (IV) for Nifty’s Call options settled at 9.48 per cent, while Put options concluded at 10.65 per cent.

The India VIX, a key indicator of market volatility, concluded the week at 11.32 per cent.

The Put-Call Ratio of Open Interest (PCR OI) stood at 0.99 for the week. Overall options data indicates that 19,900-20,000 is expected to be key resistance area for the Nifty, with immediate support at 19,700 levels. The week ended witnessed narrow-range movements, reflecting a lack of decisive momentum. Given the prevailing narrow-range trading, investors may exercise caution and remain adaptable to changing market. Coming week would see market players focus on the monthly auto sales for November scheduled from December 1, with particular attention on Diwali sales figures. With both passenger vehicles and three-wheelers posting highest-ever sales in October and the two-wheeler segment also posting good sales in the month of October 2023; industry observers would look for growth momentum in November sales.

Stay overweight in the sector. Stock futures looking good are Amara Raja, Ashok Leyland, Divi Labs, GMR Infra, Granules, Hindustan Copper and Siemens. Stock futures looking weak areBajaj Finance, BOB, Britannia, Cipla, Cholamandalam Finance, ITC and Marico.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)

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