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MARKET OUTLOOK

* Last month Nifty had outperformed global equity markets and in fact we saw a new high over 20,000 on Nifty, that too when most of the market were correcting. US market saw around 5% decline in September month driven by FED indication of one more interest rate increase which can happen in coming months and higher FED interest rate will continue for longer period. We saw US 10 year bond yield moving to multiyear high and dollar index moving up sharply indicating risk off situation in the US market. The run up in small cap in Indian market was also stretched in September month before seeing some correction in later half of the month.

* Though broader economic data continues to remain strong in India but we are seeing some initial risk factors emerging in the economy. Crude Oil is moving towards $100 mark and if it sustains at these level then it will have an impact on current account deficit & fiscal deficit as government might have to compensate OMCs for lower recovery, cost of production moving up for various companies and currency depreciating. This year rainfall is also below normal and unevenly distributed which will have impact on purchasing power in Rural India. The consistent higher interest rate in US and other developed market will ultimately slow down these economies and will have impact on export demand.

* In near term the market will be driven by Q2 results and management commentary thereafter. In that we had seen Accenture result already giving indication of softer result of Indian IT companies. Large Banks will see some more decline in NIM and that may be the bottom and we may see NIM stabilizing thereafter. We have already seen correction in some of the Banking large cap shares and they can present an opportunity. Steel and Cement companies should report better numbers with improvement in margin. Consumer related companies will see YoY lower growth on account of one month delay in festival season. Capital Goods companies will continue to do well. So in all the Q2 result will be mix bag with some positive and some negative.

* Overall we expect Nifty to remain range bound in October month with range of 19400-20000. Also one needs to be cautious in small cap stocks where valuations has moved up to very high levels. 

NIFTY TECHNICAL OUTLOOK

* The Nifty experienced a roller-coaster ride in September, hitting an all-time high of 20,222.45, after profit-booking brought it down to the 19,550 level.

* The Nifty is currently facing strong resistance between 19,720 and 19,840 on a closing basis. As long as the Nifty struggles to move higher, positive momentum may not be sustained. Looking at the technical set up, the immediate support lies at 19,540. If it fails to hold this support, i.e. 19,370 on a closing basis, then we may see further sell-off, potentially taking the Nifty towards 19,100/18,800.

* Any move above the 19,840 mark would likely signal a positive rally towards 20,100/20,300 levels.

* The daily momentum indicator is showing negative crossover, indicating a potential correction or consolidation in the index. Traders should consider taking profits during rallies and look for opportunities to buy on dips. Any dip towards 19,370 will contribute to strengthening the Nifty. 

BANKNIFTY :-

* Technically, the Bank Nifty has immediate support at 44,400. A close below 44,400 may extend the decline towards 43,800/43,200. On the flip side, resistance is positioned at 45,200 levels. Beyond that, the Bank Nifty may witness a positive move towards 45,700-46,200 levels. 

DERIVATIVES OUTLOOK

* The Nifty Sep rollover of 76% is lower than its Three months average of 79.33% and higher than its six months average of 74.45%.

The Banknifty Sep rollover of 85.53% is higher than its Three months average of 77.86% and its six months average of 81.13%.

The market wide rollover of 92.56% is higher than its three months average of 90.84% and its six months average of 91.73%.

Nifty is opening the series with average open interest which means that the index is likely consolidate further and witness buying in the second half of the month.

The Index options OI for Oct series is indicating that index is likely to remain range-bound for the first part of the series.

The PCR and VIX are both starting with low numbers indicating positive bias

View: The index is likely to remain rangebound in the first half of Oct series with important supports placed at 19500-19000 levels and resistance at 19700-20000 levels.

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