Dalal Street Week Ahead: Nifty Analysis For November First Week

LAST WEEK

NIFTY opened the week with a gap-up at 17,750 on Monday and had a volatile short week truncated by the Diwali holidays. The range was 200 points and NIFTY closed at 17,787, up by 211 points or 1.2%.

Monday: Muhurat session with a gap-up like the previous years but there was no big selling.

Tuesday:  Gap-up but there was a big round of sell-off.

Wednesday: Holiday on account of Diwali.

Thursday: Steady down-trending day but there was a huge last-hour bounce.

Friday: Rather volatile after a flat opening. There was an up-move from 17,730 to close at 17,787.

BANK NIFTY opened with a gap-up at 41,382. The index could not sustain the gap-up above 41,500. There was consolidation around 41,300 but the bears won it in the end and the index closed below 41,000, at 40,990, up by 207 points or 0.5%.

IT had a flat week after selling pressure from the top.

Foreign Institutional Investors net-bought shares worth Rs 4,000 crores last week.

Domestic Institutional Investors net-sold shares worth Rs 1,200 crores.

It looked like the bulls were going to give up the gains made during the early week on seeing the down-move on the expiry day. However, there was an astonishing bounce in the last hour. The FIIs remained net-buyers and that contributed in a big way.

The bulls wanted a follow-up this week and they have got it though there was selling pressure. Consolidation around this zone and a breakout will be good for the market. Our market has been moving non-stop without giving consolidation anywhere.

The US markets had a very bullish week. DOW moved up by more than 5%. The previous week also saw such a big up-move. This follow-up is going to help lift global sentiments.

The volatility index for the US markets, S&P VIX has come down to 25.8 now. This is a 13% drop and is good for the markets. This will help reduce the overnight risk of option sellers in our markets as well.

The European markets also had a positive close but things are mixed in the Asian markets. Leaving NIKKEI which has closed 0.8% in the green and KOSPI, the other indices saw a big fall. Look at HANG SENG; it is 8% down WoW. The Chinese markets have closed the week deep in the red. 

Whom will our markets follow? The west or the east? The deciding factor will be the Fed interest decision coming up this Wednesday. It is expected that there will be a 75 basis points hike. 

The European Central Bank hiked the interest rate by 75 bps as expected on Thursday.

The US economy grew in the last quarter and the figure is above the street estimates.

China’s budget deficit touched a record $1 trillion.

Rishi Sunak has become UK PM.

Germany CPI came out at 10.4%.

SGX NIFTY is at 18,028.

We have been getting openings away from Sgx Nifty recently and that is reducing the credibility of Sgx as a premarket indicator.

INDIA VIX is at 15.9, dropping by 4%.

WEEK AHEAD

NIFTY has supports at 17,730, 17,680 and 17,570. We can expect resistances at 17,810, 17,920, 18,000 and 18,100.

BANK NIFTY has supports at 40,860, 40,740 and 40,350. Resistances are at 41,320, 41,500 and 41,840.

NIFTY has the highest call OI build-up at 18,200. The highest put OI build-up is at 17,700. 

BANK NIFTY has the highest call OI build-up at 41,500 and the largest put OI build-up is at 41,000.

The highlight will be the Fed interest rate decision on Wednesday. Inflation is killing the economy and CPI of both UK and Germany are above 10! The Fed officials recently stated that they will not hesitate to hike rates until inflation subsides.

Euro CPI and India Infrastructure output data will be out on Monday. Tuesday will see OPEC meeting and US Manufacturing PMI data. We have Bank of England Interest rate decision on Thursday and US Jobs data on Friday.

Looking at price action, we need NIFTY to close above 17,810 first to see a steady rally. This is the high of the bearish engulfing candle we had earlier in the day-chart. 17,920 will be the next hurdle for NIFTY and there is the psychological 18K mark. Do you think NIFTY will skip the level with a gap-up this time also?

I will be closely watching 17,680 on the downside and 17,920 on the upside.

Let us know your expectations for the week in the comments section!