WHAT LIES AHEAD : NEAR-TERM PICTURE
SPOT NIFTY : Indian stock market bulls somehow managed to outpace the bears on a weekly basis, but witnessed extreme moves on the daily time frame. Optimism in the US markets and a good start to the domestic earnings season pulled the markets up, but the prevailing trade tensions and crude oil price rise tried dragging the markets down. Further, the fear ahead of the probable rate hikes in December have kept the investors on their toes.
The benchmark indices outperformed the Mid-cap index which gained 1.9%, while they underperformed the Small-cap index, which surged 3.4%. Almost all sectoral indices ended in the green, with FMCG and Power on the forefront of the move with gains of 4.3% and 3%, respectively.
Our benchmark index Nifty bounced back from its recent low of 10138 level and surged near to its 38.2% retracement level, but retreated. Thereby, last week might have acted as a breather after 5 consecutive weekly falls. The bounce-back on the daily time frame was not supported by volumes. Nifty turned back from below its 200-day EMA level of 10752. Nifty has formed a bearish engulfing pattern on the daily time frame, and hence, if the retreat continues, we hold 10355-10320 as the immediate supports, provided the Nifty falls below the 10425 level. The levels of 10140-10120 will act as crucial support areas. On the other hand, if Nifty continues to bounce, we hold 1052010575, followed by 10755, as the resistances.
NIFTY DERIVATIVES: The Indian Volatility Index (VIX), a gauge for market’s short term expectation of volatility, climbed about 3.51 per cent to 17.98. Nifty October 2018 future last price stood at 10,445.95 at a discount of 7.10 points over spot closing of 10,453.05. Nifty November 2018 future last price stood at 10,498 at a premium of 44.95 points over the spot closing of 10,453.05. The Nifty Put-Call Ratio (PCR) Open Interest-wise stood at 0.85 for October month contract. Among Nifty calls, 10,700 strike price from the October month expiry was the most active Call. Among Nifty Puts, 10,500 strike price from the October month expiry was the most active Put. For the October series, the maximum OI outstanding for Puts was at 10,000 strike price, and that for Calls, it was at 11,000 strike price.