The domestic market witnessed volatility in September as concerns over higher interest rates, foreign capital outflow and global economic slowdown weighed on sentiment. However, the Nifty 50 ended the month with a gain of 2 per cent while the Sensex rose 1.5 per cent. The BSE Smallcap index also rose about a per cent. The BSE Midcap index, on the other hand, jumped 3.7 per cent in September.
In its derivatives, monthly rollover report, domestic brokerage firm Religare Broking revealed Nifty closed at around 19,525 after volume weighted average price (VWAP) based selling activity was witnessed throughout the day.
In its report, Religare highlighted that at 95 per cent, banking, chemicals, media, and textile are the sectors where the highest rollovers were witnessed in the September series. Whereas at 90 per cent, metals, oil and gas, and telecom were the sectors where lowest rollovers were witnessed.
At expiry, VIX was at around 12.5 per cent levels implying around 690 odd points swing in the Nifty in next 30 days,” said Religare Broking.
Nifty October Futures contract Open Interest started with around 97 lakh compared to 100 lakh in September. Banknifty October futures have seen an Open Interest of around 22 lakh compared to 23.6 lakh in September.
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Nifty futures has rolled at around 76 per cent compared to 78 per cent which is lower with respect to the previous series. The Open Interest for the new contract is also lower by around 3 lakh with respect to the last month contract implying long unwinding of positions in the Index.
Which stocks to invest in October series as per Religare Broking?
GNFC, Glenmark, NTPC, and Asian Paints are the top picks for the October series, according to Religare Broking.
GNFC(CMP : 602):
The stock lost marginally in September series with huge addition of OI to the tune of 27 per cent. The rollovers are good at 97 per cent. ”On the basis of decent cash based buying, we believe it is poised for further leg of up move. So be positive in GNFC keeping a stop at 570,” said Religare Broking.
Glenmark(CMP : 790):
The stock gained marginally in September series with OI addition of 56 per cent. ”With Good delivery based buying in last session of the series, we believe it would attract fresh buyers going forward. So we have a Positive Stance in the stock with Strong support at 760,” said the brokerage.
NTPC (CMP: 245):
The stock has witnessed fresh long buildup by adding 46 per cent OI with 8 per cent rise in price in the last series. ”With good delivery buying in equities, we believe the stock is primed to continue its upward trend keeping 240 as a support,” said Religare Broking.
Asian Paints (CMP: 3160):
It has witnessed creation of fresh short positions in the previous series with a rise of 47 per cent OI which are likely shorts. Cash data further indicates selling near the 3,200 levels. The stock is likely to correct towards the 3,050 levels, according to the brokerage.
Also Read: These 48 smallcaps log double-digit rise as Sensex settles 1.5% higher in September; do you own?Outlook for October
Short rolls was seen majorly in October series. For October futures with an average price of around 19,800 which becomes a pivot for the month. Till the time Nifty trades below 19,800, the index might be on sell on rise mode.
”We expect the Nifty to find strong support at 19,300-19,350 levels for October series. On spot basis 20,000-19,300 might be the range for Nifty for first fortnight of October series,” said Religare Broking.
Foreign institutional investors (FIIs) have sold around ₹25,000 crore in cash market for the September month. FIIs long ratio is now at 30 per cent vs 50 per cent previously in Index futures implying more of hedged short positions into the October series.
The brokerage believes fast-moving consumer goods (FMCG) and chemical are the sectors that can outperform the index in the October series.
‘’Nifty made multiple attempts to cross the hurdle of short term moving average i.e. 20 EMA last week but couldn’t succeed. Going ahead, the tone would remain bearish until it crosses 19,750 and expect 19,200-19,450 zone to be tested soon. On the flip side, a decisive break above that mark may fuel recovery to 19,850-20,000,” said Ajit Mishra, SVP – Technical Research, Religare Broking Ltd.
‘’Amid all, mixed trends across sectors and buoyancy on the broader front are offering trading opportunities on both sides so participants should continue with stock-specific approach, with focus on risk management,” 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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