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MARKET OUTLOOK

Last month we saw good correction in Nifty along with broader market. This was mainly driven by increasing energy prices in recent past driven by Geopolitical issues, increasing bond yields and dollar index, creating uncertainty in US, corporate result performance in India wherein IT sector performance got impacted by lower demand and uncertainty in US, FMCG volume growth got impacted by lower demand especially in rural area and also shift of festival season by one month, BFSI sector on account of tight liquidity condition impacting NIM. Also increasing populist measures by government ahead of election is creating uncertainty about investment in infrastructure sector.

Another reason for correction in small cap stocks was their outperformance as compared to Nifty. The BSE small Cap index outperformance was around 22% at one point of time as compared to Nifty which is one of the highest in its history. Also Small cap index saw consistent gain in last 7 months leading to this correction

Going forward from here we expect geopolitical issue in Israel to cool off or get restricted to particular area. We do not expect this to escalate and other countries get involved in this. US corporate performance which up till now remains reasonably strong is now seeing some softness. Whereas in India we started to see some softness in select sectors’ performance. The consensus Nifty EPS growth expectation of around 17-18% growth for FY24 seems to be at risk and we may see some downward revision to the same.

With the current correction the Nifty, valuation has become reasonable and has come down to historic average whereas mid cap and small cap are still costly. The domestic money inflow through mutual fund and also directly continue to remain strong and is likely to support the market.

We expect Nifty to remain range bound in next series and the range can be 18600-19400.

NIFTY TECHNICAL OUTLOOK

The Nifty experienced a selling pressure in October, after hitting an all-time high of 20,222.45 in September. The sentiment on Dalal Street, was cautious to negative. Profit-booking had seen across all the sectors.

On Technical front, the Nifty is trading below the Golden Ratio i.e. 61.8% of Extension which is at 19,370 levels, indicating caution. Looking at the technical set up, the immediate support lies at 18,800. If it fails to hold this support, i.e. 18,800 on a closing basis, then we may see further sell-off, potentially taking the Nifty towards 18,500/18,200.

Nifty is currently facing strong resistance at 19,370. Once Nifty manages to trade above 19,370 we may witness a pullback rally towards 19,500/19,700 mark

The daily momentum indicator i.e. RSI is showing oversold zone, indicating a potential pull back may be seen in the index

.BANKNIFTY :-

Technically, the Bank Nifty has immediate support at 42,200. A close below 42,200 may extend the fall towards 41,600/41,000. On the flip side, resistance is positioned at 43,200 i.e. 200 DMA. Beyond that, the Bank Nifty may witness a positive move towards 44,000-44,800 levels.

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