On the derivatives front, it seems to have been buying action from the FIIs that has driven some trends. They have now moved to net long in index futures (from index short at the turn of October) and cut their shorts also sharply. In the last week, they also cut a lot of their index option shorts. The overall rolled position into November series is lesser compared to the last month, with Nifty at about 1.09 crore (down from near 2 crore earlier) and Bank Nifty futures also down to 16 lakh from 21 lakh shares earlier. The market seems to have therefore witnessed some long shedding and short covering in the week gone by. The other participants also appear to have shed their longs and therefore, the market can be said to be lighter in terms of positions.
So, if positions are lighter and PSU bank index has risen to a resistance level, then it is mandatory for the private banks to take over the reins if a move higher has to occur. Among these, ICICI Bank Ltd., Axis Bank Ltd and SBI are quite well-placed to give it a push. HDFC Bank Ltd. struggles in its trends yet, but is the biggest weight in the index and would need to move for the index to thrust higher.
Only SBI results are left to be declared and are due on Nov. 5. No reason that it should not be as good as the rest. If this too chips in, along with the other three above, then we should see banks taking centre stage again.
The Nifty seems a bit bereft of batting strength right now. Reliance Ltd., ITC Ltd., Bharti Airtel Ltd., Larsen and Toubro Ltd., Maruti Suzuki India Ltd., etc., will have to carry their bat for the innings to be successful. So, those are the stocks to watch next week if one entertains thoughts of higher levels during the week. The rest of the team seems a bit weighed down. Hence, the banks will have to come to the rescue of the Nifty yet again this week.
It is interesting to note that these days FII gross buy figures have become quite large (Rs 5,000-10,000 crore) even as the net figures remain average. Two things are happening here then—one is the larger-than-average buying and the second is that this is allowing the DIIs to sell their goods. So, some nice churn with stocks going into strong hands. If this continues at a similar pace, it will bode well for effecting that upside thrust.
On the Nifty, we can keep 17,550 as a lower end of support area. Ability to trade and sustain above 17,850 will decide its upward thrust. Nearest level to deal with would be 18,050 and 18,125 being most recent intermediate resistances. For Bank Nifty, 40,600 should prove a good support and a thrust beyond 41,450 will probably clinch it for the bulls.
The view continues to be upward-biased and hence, look to be buyers on intraweek dips.