By Anand James

The Nifty 50 ended the October series on a negative note with the auto and realty sectors being the biggest laggards. The highest rolls were seen in Alkem Laboratories, PEL, Indian Hotels, and ITPC while the lowest rolls were seen in India Mart, RBL Bank, Berger Paints, and PNB. The highest rollover was seen in energy and pharma while the lowest rollover was seen in healthcare. Nifty rollover for the month of October came in at 72.87% which is below the 3-month average of 76.39%. Bank Nifty rollover stood at 69.36% compared to 66.88% in September expiry. Only 11.8% of stock futures closed positively in October compared to 66% in September. But, it is in line with October 2023, which also saw low future advances at 23%. We saw a long buildup in banks, chemicals, and realty stocks while significant shorts were seen in the sector.

Muhurat Day gives mixed signals

Though Nifty and stocks advanced, there was a lack of follow-through buying in Nifty futures and call options, while VIX advanced 2.2%. Though this can be attributed to restrained participation in the f&o segment in a truncated trading session, it also points to the event-filled first week of November that would see several US data releases as well as US elections and Fed decisions.

Nifty: Expect new trading ranges

Supports came to the rescue of Nifty multiple times last week with 24300-150 region thwarting all collapse attempts. But clearly, a lack of upside momentum is visible, with the 24470-540 region remaining a stiff barrier. We will need this region to overcome in order to get assistance from short covering. The 24660-770 are the immediate resistances above, but we will require multiple days of close above 25100 in order to fully abandon the sell-on-rallies approach that continues to be the dominant theme. Alternatively, a fall back below 24150, will expose 23900-23300. Either way, Nifty appears to move out of the 23150-470 region this week.

History favours Pharma: Since rising from 2023 lows in March, the index has seen three instances of 30-33% upside followed by a 7-7.5% correction. The third instance was completed in October 2024 and if history is to repeat, we are staring at the possibility of another 30% upside (7100) for Nifty Pharm index in the next few months. Also, the Relative Strength Index is hovering close to the oversold region. Stocks like Cipla, Zydus Life, Divi’s Lab, Dr Reddy’s, Torrent Pharma, Mankind, Aurobindo Pharma and Alkem Laboratories could drive the move in the index. 

FMCG attempts a bounce from key support: After prolonged downsides, the index seems to have found support near the rising channel support of 58350 which also happens to the horizontal support zone in the weekly time zone. Also, an inside bar doji candle in the weekly scale adds to the possibility of a pullback sooner rather than later. We expect the index to move towards 61300-62300 initially and thereafter towards the eventual channel resistance of 69000 in the next few months. Stocks like Hindustan Unilever, ITC, Nestle India, Britannia, Dabur and Tata Consumer Products could drive the index.

(Disclaimer: Anand James is the Chief Market Strategist at Geojit Financial Services. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)