Bulls to consolidate position in expiry week

Last week, Nifty made a come-back in the green breaking last two weeks negative trend on booster from the Moody’s upgrade to India’s rating. Nifty closed at 10390 with a gain of 1% week on week. Midcap and small cap indices also gained 1.75% and 2.5% respectively while Nifty bank gained marginally by 0.2%.

Media sector gained the most by 4% led by Zee which gained 4.5% and Sun TV gained 3.8%, energy sector gained 3.2% led by Reliance Industries up 4.4% as company raised $800 million via 10-year bond issue which subscribed 1.6x, HPCL was up by 3.8% and ONGC was up by 2% as crude prices again reached to $63.7/bbl.

Pharma sector was in good health which gained 2.2% in which Sun Pharma gained 6% and Divis Lab was up 2.75%. IT sector also contributed to gain by 0.7% with Infosys gaining 4%. PSU banks and metal sector were dragged by 0.5%. Stocks like Maruti, RIL, Titan, TVS Motors, Voltas made their new life highs.

Markets were very range bound throughout the week and action was seen more in the mid-cap segment though Nifty managed to break and close above the important level of 10380 on the last day. FIIs sold equities worth 1870 crores while DIIs bought worth 2925 crores. Thomas Cook offered 5.4% stake in Quess Corp worth 600 crores via OFS in the last week.

US markets also soared to new highs wherein China markets corrected sharply in the last week. Standard & Poor rating agency retained its India rating to stable on last Friday on concern of weakl fiscal and lower per capita income than the peers. In the global event this week, OPEC meeting and US 3Q preliminary GDP data will be released on Wednesday. India’s 2QFY18 GDP will be released on Friday. Indian 2two-wheeler and four-wheeler companies will declare sales for November month on Friday. Wipro buyback at 320 per share will open on Thursday and Infy buyback offer at 1150 per share will open on Friday.

Nifty range breakout above 10380 level post consolidation may trigger the rally towards 10500 with volatility ahead of November month F&O expiry on Thursday. Higher crude prices with stronger rupee and auto sales numbers, auto and energy sector will be in focus for this week.

On weekly chart, pattern in process is an “upside gapping play”, indicates a continuation of the uptrend. Nifty has closed above the 61.8% retracement level also confirms bullish trend and rally to continue towards 10500 and on the downside supports are at 10300 and 10260 levels.

CRUDE PRICES, AUTO SALES IN FOCUS

• Higher crude prices with stronger rupee, auto sales, number, energy sector will be in focus for this week
   
• Nifty range breakout above 10380 level post consolidation may trigger the rally towards 10500 with volatility ahead of November month F&O expiry

The writer is  vice president-retail research, Motilal Oswal Securities Limited