Party on D-Street set to continue in November series as FIIs make a comeback

The October derivative series witnessed a tough fight between the bears and the bulls, but the bulls eventually claimed victory.

As a result, the Nifty50 registered more than 5% gains in the October series that expired on Thursday, wiping out all of the losses it made in the September series. The November series has also begun on a positive note, wherein both foreign portfolio investors (FPI) and high-net-worth individuals (HNI) have rolled over long positions.

FPIs have rolled over net long positions to the tune of about 2.3 million in index futures in the November series, against the net short positions of about 12 million added at the start of the October series.The pattern has been similar even in stock futures.

However, the overall rollovers to the Nifty50 November series, at around 76%, were still lower than the three-month average of 79%. Marketwide rollover of positions was largely in line with the average.

The rollover of bullish positions has taken place despite the uncertainties prevailing globally and the amplifying concerns of a recession.

“Going into the November series, we will be bullish and assign a higher probability of a breakout on the upside after a long spell of consolidation. Hence we will be a buyer in dips here,” brokerage

said in its report.

November will be an event-heavy series for domestic equities as it begins with the US Federal Reserve’s monetary policy meeting, immediately followed by an off-cycle meeting of the Reserve , a slew of corporate earnings, and key economic data points, including inflation.

Besides the FII positions, indicating a positive trajectory for equities, the historical performance of markets in the November series is also favouring the bulls.

Nuvama Wealth Management pointed out that the November series has settled in green in 7 out of 10 years, with an average return of 1.3%.

“We believe the Nifty index could move towards 18,200 and then find some resistance, while 17,100 will be a very important support,” it said in a report. In case the index moves closer to the 17,100 mark, then it should be used as an opportunity to buy while maintaining a strict stop loss at 16,900, Nuvama Wealth said.

The other encouraging metric is the bullish trajectory for Nifty Bank, which is expected to support the Nifty 50’s upside. Nifty Bank has outperformed Nifty50 in the October series, rallying about 10% and also scaling a lifetime high. Even after such a sharp move, traders have rolled over long positions to the November series, both in private and public sector banks, anticipating further gains.

Although analysts see room for more gains in this pack, they have not completely ruled out profit booking.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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