Trade setup for November 29: Has the Nifty recovery run its course as the December series begins?

On Thursday, the Nifty witnessed a significant reversal, falling over 450 points from its intraday highs, ending with nearly a 2% drop during its monthly expiry session. This dramatic fall, which erased gains from a sharp recovery earlier in the week, has sparked speculation about its causes. Some point to escalating geopolitical tensions between Russia and Ukraine, others to expiry-related volatility, while some believe it’s simply a routine retracement following a nearly 1,100-point recovery from last week's low of 23,263. Regardless of the reason, the Nifty not only dropped but also breached the critical 24,000 support level.

Concentrated selling in index heavyweights, including Infosys, Reliance Industries, HDFC Bank, ICICI Bank, and Mahindra & Mahindra, was a key driver of this fall, contributing to 44% of the Nifty’s losses. Interestingly, despite this sharp drop, broader markets showed resilience, with the Nifty Midcap and Smallcap indices managing to close near flat.

As Friday marks the start of a new series, traders will also witness the introduction of 45 new names in the Futures & Options space, including companies like Adani Group, BSE, Angel One, and others. The Nifty concluded the November series with a loss of nearly 300 points, largely due to Thursday’s decline, which reversed gains from the prior week. The index needs to close above 23,907 for a positive weekly close.

Foreign institutions were heavy net sellers on Thursday, reversing their purchases made during the past few sessions, including those driven by MSCI rebalancing. Domestic institutions, however, remained net buyers.

Technical Analysis

Chandan Taparia of Motilal Oswal suggests that the Nifty has formed a bearish candle on the weekly charts, indicating further downside if it fails to reclaim key resistance levels. He recommends selling any bounce until the Nifty crosses 24,350, with a downside target of 23,600.

Nagaraj Shetti of HDFC Securities sees the current weakness as a potential buying opportunity, especially between 23,900 and 23,600 levels, with a higher bottom reversal signaling an upward bounce. Meanwhile, Shrikant Chouhan of Kotak Securities notes that a technical bounce could only occur once 24,000 is reclaimed, while levels of 23,850-23,750 are likely on the downside if the Nifty remains below that level.

Nifty Bank Outlook

The Nifty Bank experienced significant volatility on Thursday, testing a high of 52,800 before retreating to 51,750. Om Mehra of SAMCO Securities sees caution in the formation of a bearish engulfing pattern on the daily chart. The resistance on the upside is at 52,600, with downside support at 51,270.

Hrishikesh Yedve of Asit C Mehta Investment Intermediates notes that the Nifty Bank has failed to break through the key resistance zone between 52,500 and 52,800, and advises booking profits on any bounce. Immediate support lies at 51,490, followed by 50,980.

F&O Cues for November 29

Fresh long positions were added on Thursday in the December futures of stocks like Astral, IndiGo, GMR Airports Infra, CONCOR, and GNFC, while fresh short positions were seen in stocks like Glenmark, HDFC Life, Samvardhana Motherson, Dr. Lal Pathlabs, and Max Financial Services.

Stocks to Watch

Some stocks have revised their price bands to 10%, including Adani Total, Paytm, LIC, Jio Financial, Angel One, and others. HDFC Life, SBI Life, and Max Life Insurance clarified on rumors about changes to bancassurance regulations, stressing that no such directive has been received from the IRDAI.