Starved of enough trading days to build on the large Diwali gains, the broader market wilted towards the week’s close as profit-booking pressure emerged. In the Nifty 50, 4 stocks are above RSI 70, and none are below 30. While 23 of the Nifty 50 stocks have their RSI above 60, two stocks have an RSI below 40. Currently, 39 Nifty 50 stocks are above their respective 20-DMA, among which four gained strength and crossed the 20-DMA this week.
Meanwhile, 9 stocks were below 50-DMA last week, but this week, 10 are below 50-DMA. 3 stocks above 50-DMA this week, which were below 50-DMA last week.
Max call Open Interest (OI) is at 25,900, and max put OI is at 25,500 for October 28 expiry, while for November 4 expiry, Max call OI is at 26,000, and max put OI is at 25,500.
FII short covering picks up pace. More in store?
Several indicators are suggesting that Foreign Institutional Investor (FII) short covering of their index futures has the potential to continue. While the long-short ratio has risen to 24.8, the highest since July 11, the fall in FII Index Future short contracts has been seen in tandem with the rise in their long contracts.
Broader market cues
While 68% of Nifty 500 stocks were above their respective 10-day SMA early last week, only 52% were above this key short-term benchmark towards the week’s close. Despite the decline on Friday, both the Nifty 50 and the Nifty 500 indices are trading around 3% above their respective 50-day SMAs. At 5.15%, the Nifty Metal Index is the farthest from this key medium-term benchmark, followed by Nifty Realty at 4.85%. On the other end of the spectrum, Nifty Media is 3.85% below its 50-day SMA. Meanwhile, the Nifty IT appears to be staging a recovery with its distance from the 50-day SMA at 2%, up from being 0.68% below the benchmark in the previous week.
Nifty Realty: Consolidation phase begins, but uptrend intact
The Nifty Realty Index’s recent rally appears to be entering a consolidation phase, as reflected by the emergence of multiple Doji candlesticks—typically signalling indecision and potential short-term profit booking. Although momentum has slowed momentarily, the long-term trend is still favourable.
The index has closed above the 32.8% Fibonacci retracement level on the weekly chart, and a bullish MACD crossover further supports the likelihood of continued strength. These technical cues suggest that any near-term dips may attract buying interest.
Looking ahead, the Index is expected to resume its upward movement following this consolidation, with projected upside targets at 957 and 978. On a stock-specific note, counters such as DLF, Lodha, Godrej Properties, Oberoi Realty, Phoenix Mills, and Prestige Estates continue to demonstrate relative strength. These stocks are well-positioned to withstand short-term profit-taking and are likely to lead the next leg of the rally.
Bank Nifty: Further pullback likely?
Bank Nifty is showing signs of caution, with an Evening Star candlestick pattern forming on the daily chart alongside fading momentum in the MACD histogram—both pointing to a continuation of the current pullback. The weekly chart adds to this bearish outlook, displaying a Shooting Star formation that typically precedes short-term declines.
Derivatives data reinforces this cautious sentiment. On Friday, nearly half of the banking stocks saw short build-up, while over 40% experienced long unwinding week-on-week, indicating that traders are bracing for further downside.
Adding to the pressure, major banking names, including HDFC Bank, SBI, Kotak Mahindra Bank, and Axis Bank, are showing signs of vulnerability. These stocks may continue to drag the index lower during this corrective phase, unless support from resilient names like SBI holds firm.
About author
The author is Anand James, Chief Market Strategist at Geojit Investments.
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