Nifty November series outlook: 4 stocks where investors can park their money; do you own?

The US Federal Reserve’s story of higher rates for an extended period has helped push US Treasury yields to multi-year highs, making them more attractive to investors. As a result, foreign investors are offloaded ₹22,850 crore of Indian shares so far in October, the most in any month since January.

The Fed is widely expected to keep rates on its policy decision after the bell on Wednesday, but Chairman Jerome Powell’s comments will be key.

Any sign of rates remaining high for a prolonged period will weigh on IT stocks, which have already warned of weak spending by their clients in the US and Europe. The IT index lost 3.78 percent for the month – the worst in 2023.

In its derivatives, monthly rollover report, domestic brokerage firm Religare Broking revealed Nifty closed at around 19,850 after witnessing selling activity based on volume weighted average price (VWAP) during the day.

In its report, Religare highlighted that at 95 percent, textiles, infrastructure, capital goods, and banking were the sectors that saw the highest moves in the October series. Whereas, at 90 percent, power, metals and media were the sectors where the lowest rollover was observed.

Nifty, Bank Nifty derives summary

Nifty futures rose at around 83 percent as against 76 percent, which is lower compared to the previous series. The open interest for the new contract is also higher by around 13 lakh compared to last month’s contract suggesting fresh short positions in the November series.

Bank Nifty futures rose 79 percent compared to 85 percent in the previous month. Nifty Bank futures saw higher open interest of around 1.54 lakh for October. Bank Nifty underperformed the Nifty in October, and the brokerage believes this may continue in November as well.

”At expiration, VIX was at around 12.5 per cent levels which suggests a swing of around 665 odd points in the Nifty in the next 30 days,” said Religare Broking.

Which stocks to invest in Samhain series according to Religare Broking?

SBI Life Insurance, Coal India, UBL, and IPCA Laboratories are the top picks for the November series, according to Religare Broking.

SBI Life Insurance (CMP : 1310):
The stock has seen short coverage in the October series with an increase in price. ”With cash based delivery buying seen as well as a good rollover at 98 percent, we believe it is on the verge of a further move from 1,300 levels. Be positive in SBI Life holding a stop at 1,270 for a target of 1,360,” the brokerage said.

UBL (CMP : 1580):
The stock gained about 2 percent in the October series with a good OI addition of 37 percent and good delivery buying near the 1,580 mark. Keeping 1,530 as a stop, one can go far with a target near 1,680, according to Religare Broking.

Coal India (CMP: 308):
The stock saw short coverage of 17 percent OI with prices rising around 5 percent. The stock is still looking to buy cash and hold 295 as support, the same can be bought to move towards 335, according to the brokerage.

IPCA Laboratories (CMP: 985):
It added a good opening interest of 31 percent with prices rising about 8 percent. Taking support from 970 levels the stock is a good money buy and is likely to continue trading higher. “One can buy IPCA Lab for a target of 1,060 and keep 955 as a stop,” said Religare Broking.

Also read: FPIs emerge as net sellers for the 2nd month in a row, unloaded ₹20,356 crore in Indian equity; here is the reason

Outlook for November

Nifty November Futures Open Interest (OI) contract started with around 110 lakh compared to 97 lakh in October. October Bank Nifty futures saw Open Interest of around 23.5 lakh as compared to 22 lakh in October.

The November series saw mostly short rolls. As for the November future, an average price of around 19,400 will be the pivot for the month. Until Nifty trades below 19,400, the index is in bullish selling mode.

”We expect the Nifty to find strong support at 18,500-18,600 levels for the November series. On a spot basis the range for Nifty could be 19,200-18,600 for the first fortnight of the November series,” said Religare Broking.

The brokerage believes that the sectors that can outperform the index in the November series are fast moving consumer goods (FMCG) and pharmaceuticals.

Foreign institutional investors (FIIs) sold approx. ₹25,000 crore in the money market for the month of October. The FII’s long ratio is now at 11 percent as against 30 percent previously in Index futures suggesting more fresh short positions into the November series.

Nifty ended a three-month long consolidation phase and tested the long-term moving average (200 EMA) after six months.

“It has already recovered about 7 percent from the all-time high but a breakdown below 18,800 could trigger the next leg of the slide to the 18,200-18,500 zone. In case of a rebound, the barrier around the 19,200-19,500 zone would put the upside,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

”Among the key sectors, banks still look the weakest while selected stocks from auto, realty, FMCG and pharmaceuticals remain strong so plan your trades accordingly. Since the choppiness is high on the broader side, traders should take advantage of index majors, focusing on shorting opportunities on the rise,” said Mishra.

Disclaimer: The above opinions and recommendations are the opinions and recommendations of the individual analysts and brokerage firms, not the opinions of the mint. We encourage investors to check with certified experts before making any investment decision.

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Updated: 01 November 2023, 07:09 PM IST