After three weeks of consolidation, there was a good rally in the Indian stock markets last week. The market remained resilient despite several headwinds as the dollar moved above the 83 mark while US bond yields hit record highs. We are heading towards a short festive week where the bulls have reason to celebrate Diwali at higher levels as the US market witnessed a sharp jump in Friday’s trading session.
The market will keep an eye on the direction of global markets, dollar index, US bond yield and crude oil prices. On the domestic front, there may be some volatility from the end of October while Q2 earnings will lead to stock-specific movement.
technically, nifty Looking to form higher highs and higher lows after respecting its 200-DMA. On the upside, 17725 is an immediate hurdle; Above this, we can expect a rally towards the 17900-18000 zone. On the downside, 17,400 is an immediate and strong support level while 17300-17200 is the next demand zone. As per the open interest distribution, 17500 will act as a major put base before the monthly expiry.
Bank Nifty is outperforming and is likely to hit an all-time high of 41,840. On the downside, 40500 is an immediate support while 40,000 is a strong support level.
The long exposure of FIIs to index futures at 30% is still in oversold territory while the put call ratio is at a neutral level of 1.03. The market is light and will also get support from short covering.
Santosh Meena is Head of Research at Swastika Investmart Ltd.
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