Nifty November series outlook: 4 stocks where investors can park their money; do you own?

The US Federal Reserve’s narrative of higher-for-longer rates has helped send US Treasury yields to multi-year highs, making them more attractive for investors. As a result, foreign investors have offloaded ₹22,850 crore worth of Indian shares so far in October, the most for any month since January.

The Fed is widely expected to hold rates at its policy decision after the bell on Wednesday, but Chair Jerome Powell’s commentary will be key.

Any indication of rates remaining high for a prolonged period will weigh on IT stocks, which have already warned of weak spending by their US and European clients. The IT index lost 3.78 per cent for the month – its worst in 2023.

In its derivatives, monthly rollover report, domestic brokerage firm Religare Broking revealed Nifty closed at around 19,850 after volume weighted average price (VWAP) based selling activity was witnessed throughout the day.

In its report, Religare highlighted that at 95 per cent, textile, infrastructure, capital goods, and banking are the sectors where the highest rollovers were witnessed in the October series. Whereas at 90 per cent, power, metals, and media were the sectors where lowest rollovers were witnessed.

Nifty, Bank Nifty derivates summary

Nifty futures has rolled at around 83 per cent compared to 76 per cent which is lower with respect to the previous series. The open interest for the new contract is also higher by around 13 lakh with respect to the last month contract implying fresh short positions in the November series.

Bank Nifty futures rolled at 79 per cent compared to 85 per cent, in the previous month. Bank Nifty futures have seen higher open interest of around 1.54 lakh with respect to October. Bank Nifty had underperformed the Nifty in October, and the brokerage believes this might continue in November too.

‘’At expiry, VIX was at around 12.5 per cent levels implying around 665 odd points swing in the Nifty in next 30 days,” said Religare Broking.

Which stocks to invest in November series as per Religare Broking?

SBI Life Insurance, Coal India, UBL, and IPCA Laboratories are the top picks for the November series, according to Religare Broking.

SBI Life Insurance (CMP : 1310): 
The stock has seen short covering in the October series with rise in price. ‘’With cash based delivery buying seen along with good rollovers at 98 per cent, we believe it is poised for further leg of up move from 1,300 levels. Be positive in SBI Life keeping a stop at 1,270 for a target of 1,360,” said the brokerage.

UBL (CMP : 1580): 
The stock gained around 2 per cent in October series with good OI addition of 37 per cent with good delivery buying near the 1,580 mark. Keeping 1,530 as the stop, one can go long with a target near 1,680, according to Religare Broking.

Coal India (CMP: 308): 
The stock has witnessed short covering of 17 per cent OI with prices rising by around 5 per cent. The stock is still witnessing cash buying and keeping 295 as the support, one can buy the same for a move towards 335, as per the brokerage.

IPCA Laboratories (CMP: 985): 
It has added good open interest of 31 per cent with prices rallying around 8 per cent. Taking support from 970 levels the stock has seen good cash buying and is likely to continue trading higher. ‘’One can buy IPCA Lab for a target of 1,060 while keeping 955 as a stop,” said Religare Broking.

Also Read: FPIs emerge net sellers for 2nd month in a row, offload ₹20,356 crore in Indian equities; here’s why

Outlook for November

Nifty November Futures contract Open Interest (OI) started with around 110 lakh compared to 97 lakh in October. Bank Nifty October futures have seen an Open Interest of around 23.5 lakh compared to 22 lakh in October.

Short rolls was seen majorly in November series. For November futures, an average price of around 19,400 becomes a pivot for the month. Till the time Nifty trades below 19,400, the index is in sell-on-rise mode. 

‘’We expect the Nifty to find strong support at 18,500-18,600 levels for November series. On spot basis 19,200-18,600 might be the range for Nifty for first fortnight of November series,” said Religare Broking.

The brokerage believes fast-moving consumer goods (FMCG) and pharmaceuticals are the sectors that can outperform the index in the November series.

Foreign institutional investors (FIIs) have sold around ₹25,000 crore in cash market for October. FIIs long ratio is now at 11 per cent compared to 30 per cent previously in Index futures implying more of fresh short positions into the November series. 

Nifty has ended three-month long consolidation phase and tested the long term moving average (200 EMA) after six months. 

‘’It has already retraced around 7 per cent from its record high but a breakdown below 18,800 could trigger the next leg of a slide to 18,200-18,500 zone. In case of a rebound, the hurdle around the 19,200-19,500 zone would cap the upside,” said said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.

‘’Among the key sectors, banking still looks weakest while select stocks from the auto, realty, FMCG and pharma are still holding strong so plan your trades accordingly. Since choppiness is high on the broader front, traders should prefer index majors, with focus on shorting opportunities on the rise,” added Mishra.

Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Updated: 01 Nov 2023, 07:09 PM IST