By Manojh Vayalar
This December series so far has been on an optimistic tone for both the Nifty and Bank nifty, triggered majorly due to cash-based buying from FIIs and Long positioning in the Index Futures. FIIs started this series with around 77% Index longs, with some volatility they are still at 66.5% as of today. The India VIX has fallen to a year low of 13.5% levels and hence it implies the participants are not nervous and every dip seems like an opportunity to buy. The VWAP(Volume weighted average price) of Nifty December is around 18300 implying that to be the support for these longs.
Bank Nifty has been at par to the Nifty price wise with around 4.2% gains in November. However, the December series started with a huge 30 lakh positioning almost 12 lakh more than the November series. This was last seen in the April series when the HDFC and HDFC Bank merger news was out in March end.
The ratio between Bank Nifty and Nifty is currently at 2.31, this ratio has support at 2.27 and resistance near 2.38. We expect outperformance by the Bank Nifty in this series. Every time the Bank stocks lead the rally, the trend has strength and we expect Nifty to touch 19000-19200 in this series. Bank Nifty is likely to rally till 44500 levels with strong support near 42800. Bank Nifty’s outperformance might trigger a stronger momentum and lead the Nifty towards 19000-19200 levels in the December series.
The Nifty VIX is at 13.7% and we expect it to inch towards 15-16% levels. Sector wise, Banks, Realty, and Metals gained momentum in this series so far and we expect stocks like Tata Steel, State Bank of India, IndusInd Bank, HDFC Bank, DLF, Tata Motors and Hindalco can lead the rally. Tata Steel has witnessed huge delivery based buying as well at 108 levels we expect the stock to rally till 121 in this series. Tata Motors with a base at around 420 levels can rally till 454 in this series. Realty rolled around 96% vs 95% in December series and we expect DLF, Oberoi Realty and Godrej property might lead the Index this series.
(Manojh Vayalar is VP – Derivatives Research, Religare Broking. The views expressed are the author’s own. Please consult your financial advisor before investing)