800-point rally puts Nifty on the cusp of 20,000 but one level is a barrier

The Nifty 50 ended lower on Friday but still had its best week in two months. From the October 27 lows, which is the start of the November series, the index has gained 800 points. The rally of the truncated Diwali week left investors richer by ₹7 lakh crore.

Three straight weekly gains have put the Nifty 50 within 250 points of the 20,000 mark. However, the 19,800 mark continues to remain a barrier for the index, as Friday was the second day in a row, when the Nifty crossed that mark, but failed to sustain above the same.

“Now that inflation risks are not overly concerning, margin tailwinds may continue, US bond yields have softened, and a sustained earnings trajectory potentially puts India back into focus, even though the upcoming elections are likely to be a distraction,” Amit Sachdeva of HSBC wrote in a note.

After two days of being net buyers in the cash market, FIIs returned to being net sellers on Friday. Interestingly, domestic institutions, who have been consistent buyers all this while, also turned net sellers on Friday.

Nagaraj Shetti of HDFC Securities wrote that even though the near-term uptrend of the market remains intact, there is a possibility of some more consolidation or minor weakness on the Nifty for the next 1-2 sessions. “A decisive breakout of 19,875 (Thursday’s high), is likely to bring more upside for the short term,” he wrote. 19,600 – 19,550 on the downside can act as a short-term support.

The street has respected the buy on dips sentiment since the Nifty crossed 19,500 on the upside, according to Rupak De of LKP Securities. He expects the trend to remain positive as long as the Nifty trades above key averages. On the downside, 19,630 is a support, while 19,850 will remain a resistance zone.

Amol Athawale of Kotak Securities expects rangebound action on the index due to the temporary overbought conditions, although the texture of the market remains positive. He sees 19,900 as a key hurdle for the Nifty, while 19,575 on the downside may act as a key support level.

The Reserve Bank of India’s announcement of asking banks and NBFCs to set aside more capital to back unsecured loans like personal and credit card loans weighed on nearly all banking and financial stocks on Friday.

As a result, the Nifty Bank underperformed on the final trading day of the week, fell back below the mark of 44,000 and also posted a loss for the week. The index declined in three out of the four trading sessions of the week.

Kunal Shah of LKP Securities said that the next support for the Nifty Bank on the downside is in the 43,300 – 43,250 zone. In case that level is broken, the index may fall towards 42,700, while sustaining above those levels may see a recovery back to 44,000.

Kotak Securities’ Athawale mentions that the 20-Day Simple Moving Average of 43,400 will be a crucial support for the Nifty Bank, above which, the index can retest the 50-DMA of 44,200. In case it manages a break above that level, it can see further upside towards 44,500.

What Are The F&O Cues Indicating?

Nifty 50’s November futures shed 2.7% or 2.97 lakh shares in Open Interest. They are now trading at a premium of 74.7 points compared to 64.5 points earlier. On the other hand, the Nifty Bank futures added 7.4% or 1.57 lakh shares in Open Interest. Nifty 50’s Put-Call Ratio is now at 1.02 from 1.17 earlier.

RBL Bank has entered the F&O ban list from Monday’s session, while SAIL is out of the list. Zee Entertainment, Delta Corp, Hindustan Copper, MCX, Chambal Fertilisers, Manappuram Finance and India Cements continue to remain in the F&O ban period.

Nifty 50 on the Call side for November 23 expiry:

For this Thursday’s expiry, the Nifty 50 call strikes between 19,700 and 19,900 saw addition in Open Interest. The 19,800 strike saw the maximum addition in Open Interest.

Nifty 50 on the Put side for November 23 expiry:

For this Thursday’s expiry, the Nifty 50 put strikes between 19,650 and 19,800 have seen Open Interest addition.

Lets take a look at the stocks that added fresh long positions on Friday, meaning an increase in both price and Open Interest:

Lets look at the stocks that added fresh short positions on Friday, meaning a decrease in price but increase in Open Interest:

Some stocks witnessed short covering on Friday, meaning an increase in price but decrease in Open Interest:

These stocks saw unwinding of long positions on Friday, meaning a decrease in both price and Open Interest:

These are some stocks to watch out for ahead of Monday’s trading session:

Larsen & Toubro: Qatar imposes ₹111.31 crore penalty for tax period for financial year 2017 and ₹127.64 crore for financial year 2018. An appeal has been filed against the levy of this penalty as the company believes it is arbitrary and unjustified.

Cipla: Indore unit gets a warning letter from the USFDA. Warning letter based on inspection carried out between February 6 – February 17, 2023. The plant manufacturers respiratory and oral products.

Bajaj Finance: Has temporarily suspended issuance of existing member identification cards (EMI Cards) to new customers till the time deficiencies observed by the RBI are rectified to their satisfaction.

SBI Cards: Positive move from RBI to ensure prudent growth in unsecured lending. The RBI decision will impact Capital Adequacy by 4%. The company does not foresee significant impact on cost of funds this financial year. If needed, will raise tier-II capital. It also said that there is no need to raise funds via equity.

Cipla: Gives a guarantee worth ZAR 945 million to First Rand Bank, South Africa, for extending general banking facilities to subsidiary Medpro Pharma.

Bank of Baroda: Capital raising committee has approved theissuance of Tier-II / sub-debt bonds worth ₹2,000 crore with a greenshoe option to raise another ₹3,000 crore. The bank has further decided to issue infrastructure bonds worth ₹2,000 crore with a greenshoe option to raise an additional ₹8,000 crore.

Delhivery: Softbank sells 1.83 crore shares of the company at ₹403.51 per share. The total deal value is said to be worth ₹739 crore.

RITES: Awarded tender for 10 diesel electric locomotives by CFM Mozambique, loses tender for 300 high side wagons by CFM Mozambique.

Aurobindo Pharma: USFDA inspection of APL Healthcare’s Telangana unit closed with zero observations and with a classification of “No Action Indicated.”

South Indian Bank: Hikes lending rates by 5 basis points across tenors from November 20, 2023.